Section I Important Notice, Contents and DefinitionsThe Board of Directors and the Board of Supervisors of the Company and its directors,supervisors and senior management warrant that the information contained in this annualreport is true, accurate and complete without any false and misleading statements or materialomissions, and severally and jointly accept legal liability thereof.Liu Peng, the person in charge of the Company, Dong Ye, the person in charge of accountingof the Company, and Xu Xianjing, the person in charge of the accounting department of theCompany, have declared that they warrant the truthfulness, accuracy and completeness of thefinancial statements set out in this annual report.All directors of the Company attended the Board meeting on which this report was reviewed.Discrepancies in the sum of decimals in this report are caused by rounding.The forward-looking statements in this annual report, including future plans anddevelopment strategies, do not constitute substantive commitments of the Company toinvestors. Investors should be aware of the investment risks.The Company has described potential risk factors and countermeasures that may exist in itsoperations in Section III Discussion and Analysis of the Management and Section XI FutureDevelopment Prospects of the Company. Investors are advised to pay attention to the relevantcontents.The Board meeting has deliberated and approved the following profit distribution proposal:
distribute a cash dividend of RMB 1.0 (tax included) for every 10 shares to all shareholdersand issue 0 bonus shares (tax included) based on the Company’s total share capital minus thenumber of repurchased shares as of the equity registration date of the Company’simplementation of the profit distribution plan; meanwhile, no capital reserve will beconverted into share capital.
Contents
Section I Important Notice, Contents and Definitions ...... 1
Section II Company Profile and Key Financial Indicators ...... 6
Section III Discussion and Analysis of the Management ...... 11
Section IV Corporate Governance ...... 47
Section V Environmental and Social Responsibilities ...... 89
Section VI Significant Events ...... 97
Section VII Changes in Shareholding and Information of Shareholders ...... 123
Section VIII Particulars of Preference Shares ...... 135
Section IX Corporate Bonds ...... 136
Section X Financial Report ...... 137
Documents Available for Inspection
1. The 2021 Annual Report affixed with the signature of the Company’s Legal Representative
2. Financial statements affixed with official stamps and the signatures of the Company’s Legal Representative, theperson in charge of accounting, and the person in charge of accounting department of the Company
3. Original of the audit report affixed with the stamp of the accounting firm as well as stamps and signatures of thecertified public accountants
4. All original copies of the Company’s documents and the original drafts of the Company’s announcements asdisclosed in the newspaper designated by the CSRC during the reporting period
5. Place for document inspection: Office of the Board of Directors
Terms and Definitions
| Term | Definition | |
| The Company, Company, C&S | C&S Paper Co., Ltd. | |
| Zhongshun Group | Guangdong Zhongshun Paper Group Co., Ltd. | |
| Chung Shun Co. | Chung Shun Co., a Hong Kong-based company | |
| Zhongshan Trading | Zhongshan Zhongshun Trading Co., Ltd. | |
| Zhong Shun International | Zhong Shun International Co., Ltd., a Hong Kong-based company | |
| C&S Hong Kong | C&S Hong Kong Co., Ltd., a Hong Kong-based company | |
| Beijing Trading | Beijing C&S Paper Co., Ltd. | |
| Xiaogan Trading | Xiaogan C&S Trading Co., Ltd. | |
| Chengdu Trading | Chengdu Zhongshun Paper Co., Ltd. | |
| Hangzhou Trading | Hangzhou Jie Rou Trading Co., Ltd. | |
| Shanghai Trading | Shanghai Huicong Paper Co., Ltd. | |
| Sichuan C&S | C&S (Sichuan) Paper Co., Ltd., formerly known as Chengdu Tiantian Paper Co., Ltd. | |
| Jiangmen C&S | Jiangmen Zhongshun Paper Co., Ltd. | |
| Zhejiang C&S | Zhejiang Zhongshun Paper Co., Ltd. | |
| Hubei C&S | C&S (Hubei) Paper Co., Ltd., formerly known as Hubei Zhongshun Hongchang Paper Co., Ltd. | |
| Yunfu C&S | C&S (Yunfu) Paper Co., Ltd. | |
| Yunfu Trading | Yunfu Hengtai Trading Co., Ltd., formerly known as C&S (Yunfu) Trading Co., Ltd. | |
| Tangshan C&S, Tangshan subsidiary | C&S Paper Co., Ltd. Tangshan Branch | |
| Zhongshan Paper | C&S (Zhongshan) Paper Co., Ltd., formerly known as Zhongshan Tongfu Trade Co., Ltd. | |
| Macao C&S | C&S (Macao) Co., Ltd. | |
| Dazhou C&S | C&S (Dazhou) Paper Co., Ltd. | |
| Sun C&S | Sun Daily Necessities Co., Ltd. | |
| Jiangsu C&S | C&S (Jiangsu) Paper Co., Ltd. | |
| Dolemi | Dolemi Sanitary Products Co., Ltd. | |
| Luzhou Dolemi | Luzhou Dolemi Sanitary Products Co., Ltd. |
| Mianyang Dolemi | Mianyang Dolemi Sanitary Products Co., Ltd. | |
| Dazhou Dolemi | Dazhou Dolemi Sanitary Products Co., Ltd. | |
| Guiyang Dolemi | Guiyang Dolemi Sanitary Products Co., Ltd. | |
| Zhengzhou Dolemi | Zhengzhou Dolemi Sanitary Products Co., Ltd. | |
| Xi’an Dolemi | Xi’an Dolemi Sanitary Products Co., Ltd. | |
| Zhanjiang Dolemi | Zhanjiang Dolemi Sanitary Products Co., Ltd. | |
| Yunnan Dolemi | Yunnan Dolemi Trading Co., Ltd. | |
| Bloomage Jierou | Beijing Bloomage Jierou Biotechnology Co., Ltd. | |
| Mazars | Mazars Certified Public Accountants (LLP) |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Stock abbreviation | ZSJR | Stock code | 002511 |
| Stock exchange on which the shares are listed | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 中顺洁柔纸业股份有限公司 | ||
| Abbreviation of Chinese name of the Company | 中顺洁柔 | ||
| English name of the Company (if any) | C&S Paper Co., Ltd. | ||
| Abbreviation of English name of the company (if any) | C&S | ||
| Legal Representative of the Company | Liu Peng | ||
| Registered address | No. 1 Longcheng Road, Dongsheng Town, Zhongshan City; an additional business premise is added: No. 136 Caihong Avenue, West District, Zhongshan City (F3, F4 F5 and stairwells of Building B1) (one business license and multiple business premises) | ||
| Postal code of registered address | 528414 | ||
| Historical changes of the Company’s registered address | In order to optimize information of the specific registered address, the Company’s registered address has been changed from “Shenglong Village, Tanbei, Dongsheng Town, Zhongshan City” to “No. 1 Longcheng Road, Dongsheng Town, Zhongshan City”; the actual address is not changed. | ||
| Office address | No. 136 Caihong Avenue, West District, Zhongshan City | ||
| Postal code of office address | 528401 | ||
| Company website | https://www.zsjr.com | ||
| dsh@zsjr.com | |||
II. Contact Persons and Contact Methods
| Sectary to the Board | Representative of securities affairs | |
| Name | Zhang Haijun | Zhang Xia |
| Address | No. 136 Caihong Avenue, West District, Zhongshan City | No. 136 Caihong Avenue, West District, Zhongshan City |
| Tel | 0760-87885678 | 0760-87885678 |
| Fax | 0760-87885669 | 0760-87885669 |
| dsh@zsjr.com | dsh@zsjr.com |
III. Information Disclosure and Location for Inspection of Documents
| Websites on which the annual report is published as required by the stock exchange | Shenzhen Stock Exchange (http://www.szse.cn) |
| Media on which the annual report is published | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily and http://www.cninfo.com.cn |
| Location for inspection of the annual report | Office of the Board of Directors |
IV. Historical changes of the Company’s Registration Information
| Organization Code | 914420007123239244 |
| Changes in the Company’s main businesses since listing (if any) | The Company’s business scope was changed FROM “production and sales of high-class household paper products (excluding printing process); products being sold both at home and abroad” at the listing of the Company in 2010.” TO “General items: manufacture of paper products; sales of paper products; Internet sales (excluding the sales of commodities requiring a permit); sales of daily necessities; sales of personal hygiene products; sales of household products; sales of sanitary products and disposable medical products; retail of cosmetics; wholesale of cosmetics; sales of knitwear; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-sue ceramic products; wholesale of kitchen utensils and daily groceries; R&D of kitchen utensils and daily groceries; retail of kitchen utensils and daily groceries; sales of Class I medical devices; manufacture of Class I medical devices; sales of Class II medical devices; sales of disinfectants (excluding hazardous chemicals). (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) Licensed items: import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval); manufacture of Class II medical devices; operation of Class III medical devices; manufacture of Class III medical devices. (For items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to the approval document or the permit issued by competent department) (Such items as involved in the business scope of the Company are: import and export of goods; import and export of technologies; operation of Class II and Class III medical devices; manufacture of Class II and Class III medical devices.) (The above items do not involve special management measures for the access of foreign investment.)” |
| Changes of controlling shareholder (if any) | None |
V. Other Relevant InformationAccounting firm engaged by the Company
| Name | Mazars Certified Public Accountants (LLP) |
| Office address | Zhongshen Zhonghuan Building, No. 169 Donghu Road, Wuchang District, Wuhan |
| Name of signing accountants | Wang Bing, Pan Guiquan |
Sponsor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable √ Not applicable
VI. Main Accounting Data and Financial IndicatorsWhether the Company needs to perform retrospective adjustment or restatement of accounting data for previous years
□ Yes √ No
| 2021 | 2020 | Changes over last year | 2019 | |
| Operating income (RMB) | 9,149,870,464.80 | 7,823,528,416.32 | 16.95% | 6,634,914,352.68 |
| Net profit attributable to shareholders of the listed company (RMB) | 581,097,222.93 | 905,889,081.41 | -35.85% | 603,832,650.83 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss (RMB) | 567,912,188.04 | 891,552,986.81 | -36.30% | 588,728,468.59 |
| Net cash flow from operating activities (RMB) | 1,319,579,606.83 | 828,200,862.25 | 59.33% | 1,360,374,901.86 |
| Basic earnings per share (RMB/share) | 0.45 | 0.70 | -35.71% | 0.47 |
| Diluted earnings per share (RMB/share) | 0.44 | 0.69 | -36.23% | 0.46 |
| Weighted average return on net assets | 11.82% | 19.86% | -8.04% | 16.42% |
| End of 2021 | End of 2020 | Changes over end of last year | End of 2019 | |
| Total assets (RMB) | 7,523,281,973.84 | 7,478,439,747.77 | 0.60% | 6,026,271,823.64 |
| Net assets attributable to shareholders of the listed company (RMB) | 4,903,552,661.58 | 5,042,146,076.42 | -2.75% | 4,077,004,459.23 |
The lower of the net profits before and after deducting the non-recurring profit and loss in the most recent three accounting years is
all negative, and the audit report of the most recent year shows that the Company’s ability to continue operations is uncertain.
□ Yes √ No
The lower of the net profits before and after deducting the non-recurring profit and loss is negative.
□ Yes √ No
VII. Difference in Accounting Data under Domestic and International Accounting Standards
1. Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable √ Not applicable
No such differences for the reporting period
2. Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable √ Not applicable
No such differences for the reporting periodVIII. Major Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 2,102,126,213.63 | 2,145,515,622.75 | 2,027,210,890.87 | 2,875,017,737.55 |
| Net profit attributable to shareholders of the listed company | 271,122,802.99 | 136,038,514.16 | 77,263,562.65 | 96,672,343.13 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss | 267,298,568.37 | 131,689,666.32 | 77,203,406.36 | 91,720,546.99 |
| Net cash flow from operating activities | 334,905,166.23 | 402,960,621.96 | 141,257,300.73 | 440,456,517.91 |
Whether there are significant differences between the above-mentioned financial indicators or its total number and the relevantfinancial indicators disclosed in the Company’s quarterly reports and semi-annual report
□ Yes √ No
IX. Non-recurring Items and Amounts
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount in 2021 | Amount in 2020 | Amount in 2019 | Description |
| Profits/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -2,054,550.41 | -2,980,604.57 | -2,002,045.02 |
Governmental grants reckoned into currentprofits/losses (not including grants enjoyedin quota or ration according to nationalstandards, which are closely relevant to thecompany’s normal business)
| 22,379,246.83 | 28,533,162.96 | 18,422,795.06 | ||
| Profits/losses from assets entrusted to others for investment or management | 365,973.72 | 3,868,134.28 | 333,745.61 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds |
| Other non-operating income and expenses except for the aforementioned items | -4,941,142.49 | -13,442,144.41 | 1,320,617.95 | |
| Less: Influence of income tax | 2,564,492.76 | 1,642,453.66 | 2,970,931.36 | |
| Total | 13,185,034.89 | 14,336,094.60 | 15,104,182.24 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss:
□ Applicable √ Not applicable
The Company has no other profit and loss items that meet the definition of non-recurring profit and loss.Descriptions where the Company defines any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement onInformation Disclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and lossitems during the reporting period
□ Applicable √ Not applicable
The Company did not define any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement on InformationDisclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and loss items duringthe reporting period.
Section III Discussion and Analysis of the ManagementI. Status of the Industry in Which the Company Is Located during the Reporting Period
(I) Analysis of industry status quoUnder the influence of the pandemic, the economy at large encountered great downward pressure in 2021.Meanwhile, the household paper industry faced a certain degree of operating pressure due to multiple factors suchas rising raw material prices, fierce market competition, and unsmooth global supply chain and powercuts/production restrictions in some regions. The excess capacity formed by the rapid growth in recent years andthe large production capacity base of the entire industry have slowed down its pace of growth. Despite so, thegrowth rate in China will still surpass the global average.
(II) Development trends of the industry
1. Elimination of outdated production capacity will give more market opportunities to first-tier enterprises.Competent government departments at all levels have strengthened supervision, administration and enforcementof the household paper industry and promulgated a series of regulations and policies, including the DevelopmentPolicy of the Paper Industry, the Notice of the State Council on Printing and Distributing the ComprehensiveWork Plan for Energy Conservation and Emission Reduction, the Discharge Standard of Water Pollutants for thePulp and Water Industry, the Norm of Water Intake for Paper Products, The Twelfth Five-Year Plan for PaperIndustry Development, and the Catalogs for the Management of Imported Wastes. Companies with unreasonableeconomic scale, high energy and water consumption or not up to discharge standards were shut down or orderedfor rectification within a time frame. Thus, a large number of backward production capacities have beeneliminated. With increasingly stringent environmental protection polices, backward capacities and SMEs withpoor anti-risk capabilities will be phased out at an accelerated speed, and the industry concentration level isexpected to further increase.
2. Operating models are continually innovated and product structures are constantly optimized. With regard to themarketing of the household paper industry, except for traditional distributors and modern supermarkets,e-commerce channels are continuously expanded while their shares are rapidly growing. Some leading companieshave been promoting social media marketing such as WeChat public accounts, Weibo, and live webcasting, andhave increased inputs in the development of e-commerce channels. At the same time, in order to cater to therapidly growing demands of consumers, companies continue to carry out product innovations, upgrade productspecifications and packaging designs, optimize product structures, and develop new products by capturing in timechanges in the consumption concepts of consumers. Diversified operating models emerge in the industry and
product structures are further optimized.
3. Efforts are stepped up for equipment upgrading and product R&D. People’s demand for household paper isbound to rise along with the improvement of living standards, requiring constant product capacity expansion inthe household paper industry. As such, it is inevitable for production companies of the industry to chooselarge-scale and automated production equipment, which can also meet the demands for low energy consumption,low water consumption, and low pulp consumption as specified in the overall requirements of the State’sindustrial policies for energy conservation, consumption reduction and pollution reduction. In recent years,imports of household paper equipment have been trending up in China, with a focus on the imports of body papermachines. Meanwhile, some large-scale domestic equipment is also constantly optimized and improved. It isforeseeable that large scale and automation of production equipment will be the development direction of thehousehold paper industry in the future.
4. Competitiveness of China’s household paper production companies in the international market will be furtherintensified. With the rapid development of the household paper industry in China, local enterprises occupy most ofthe domestic market shares. On the basis of meeting domestic demands, household paper produced in China hasbeen exported to a range of countries and regions around the world with certain competitive advantages. In thefuture, the competitiveness of Chinese household paper production enterprises in the international market will besteadily enhanced.II. Principal Businesses of the Company during the Reporting PeriodMr. Deng Yingzhong, founder of the Company, initiated his entrepreneurial process in 1979. Starting fromintensive paper processing, the Company has developed into a diversified group company integrating R&D,production and sales after forty plus years of striving. It is among the first batch of household paper companieslisted on China A-shares. The Company, with an adherence to the business philosophy of “building product,enterprise and professional brands”, practices the “All We Care Is You” value proposition and continues to provideconsumers with healthy, safe, environmental-friendly, comfortable and convenient products and services.Currently the Company features three major brands, namely C&S, Sun and Dolemi. Main products include toiletpaper, facial tissues, paper handkerchiefs, napkins, wet wipes, kitchen tissues, personal care products (sanitarypads), baby diapers, facial towels, etc. Specifics are given in the following:
(I) Household paperFace series: Face series are soft, delicate and pliable. Being wettable, the products can be used as face towels.Among them, the oil painting series combine quality and artistry and are therefore praised as “artwork of papertissues”.Lotion series: Specially developed for female and infant consumers, the products contain moisturizing cream.With selected high-quality 100% virgin wood pulp and quality moisturizing cream, the paper is soft, delicate and
smooth. It is the professional moisturizing facial tissue brand trusted by consumers.Natural Wood series: Made of 100% imported virgin wood pulp, the products are soft and pliable and meet the EUand U.S. requirements for food contact material testing. Consumers can feel rest assured for its high quality.C&S Jin Zun series: The products are made from 100% imported raw wood pulp and the paper is thick, pliable,and reliable.Sun series: The products use 100% virgin wood pulp. Targeting at the youth market, the brand serves as apowerful supplement to the Company’s primary brand “C&S”.Wipe series: The Company offers a variety of wet wipe products catering to different user groups (including butnot limited to adults, children and infants) and different purposes (including but not limited to c leasing wipes, wettoilet paper and wet wipes for equipment use). From basic skin cleansing to advanced care, the series can meetincreasingly segmented demands and provide a better experience to consumers.Kitchen towel series: Using 100% virgin wood pulp, the kitchen paper towels boast stronger oil-absorption andwater-absorption power and are up to the EU and U.S. Requirements for food contact material testing, therebybetter satisfying the multi-functional wiping needs of households. Meanwhile, the kitchen wet wipes boastexpedite decontamination power without hurting hands.(II) Personal care productsThe Company streamlined the personal care product business and anchored a new track for business development.It is committed to offering healthy life solutions with products + services for the whole family and all lifescenarios. Revolving around the “Healthy Life” brand matrix, the Company hopes to re-create brand values. Inaddition, the Company has built self-operated online sales channels for care products based on e-commerceplatforms to achieve omni retail.(III) Quality health productsCleansing towel series: To address user pain points, the products make constant innovations in technology,materials and craftsmanship and select 100% plant cellulose fibers. The thicker 100g Cleaning Towel series havebeen introduced, which are committed to offering the optimal experience to consumers.Business travel series: With the change of lifestyle, the Company understands that people are increasinglyconcerned about the hygiene problem during business travels. In view of this, it has developed the business travelseries such as disposable compressed towels, rinse-free antibacterial hand sanitizers, alcohol sanitary pads, etc.These products are easy to carry, clean and hygienic and can guard the health of consumers anytime, anywhere.Among them, disposable compressed towels, disposable bath towels, etc. are made of plant fibers that are natural,environmental friendly and degradable. They really make travel easy.Household series: The kitchen towels adopt advanced ultrasonic non-adhesive composite technology anddouble-sided texture design, with stronger water and oil absorption. With an ultra-high volume of 140 g/m
, theproducts are strong, tough, scrub-resistant, and not easy to flocculate and deform. In addition, the products are up
to EU and U.S. requirements for food contact material testing.
Mask series: Since the outbreak of the pandemic in 2020, in response to the call of the government, the Companystarted to produce masks to meet the demands for anti-pandemic materials. Its medical surgical masks feature“efficient filtration, low breathing resistance and comfortable wearing”. In the future, C&S will continue to escortthe breathing health of consumers.(IV) Commercial channel productsIn addition to home use, the commercial channel products target at wider use scenarios such as office buildings,government departments, enterprises and institutions, factories, airports, hotels, restaurants, entertainment venues,department stores, etc. We offer a full range of cleansing and sanitation solutions and may customize products andservices according to customer needs.
The competition in China’s household paper industry is still fierce and industry concentration will be furtherstrengthened. With enhanced awareness on the concept of healthy living, consumers pay increasing attention tobrands. Product quality is still a prominent concern in the industry. Amid all these, the Company has become oneof the representative brands of high-end household paper in the market through continuous brand building andquality assurance as well as robust production capacity layout and channel expansion. It is ranked among the firstechelon in the household paper industry and is well recognized by consumers and the market. In addition, with anadherence to the value concept of “All We Care Is You”, the Company continues to tap consumer needs andconstantly upgrades and optimizes products with leverage on its strong R&D and innovation capabilities. TheCompany is committed to providing consumers with products of better quality, more comfort, and more tailored totheir individual needs. The Company aims to achieve national product coverage which is underpinned bycontinuously improving product reputation among consumes and consolidating brand awareness.III. Analysis of Core Competitiveness
1. Belonging to the first echelon of the domestic household paper industry
The Company is a top-performing enterprise in the first echelon of the domestic household paper industry withproducts available at all channels and both at home and abroad. In addition, it actively taps overseas marketsincluding Southeast Asia, North Asia, Australia, the Middle East, and North America.
2. Constantly optimized product structure and continuously improved product competitivenessThe Company boasts three major brands, namely C&S, Sun and Dolemi. Main products include paper rolls,coreless rolls, facial tissues, tissue handkerchiefs, wipes (including wet toilet paper), personal care products, babydiapers, face towels, kitchen towels, etc.The Company continues to optimize product structure and increase the sales proportion of high-end, high-marginproducts and non-roll categories. Efforts have been stepped up for the terminal sales of the Oil Painting, Face,
Lotion and other high-end, high-margin series. Precise brand marketing strategy combined with multi-channelsales layout will help improve the distribution and penetration of high-end, high-margin products, drive thegrowth of their shares, and hence steadily improve the profit margin and profitability of products.In the context of COVID-19, consumers become increasingly concerned of health protection, which has driventheir differentiated demands for high-end tissue paper. In view of this, C&S has grasped the changing trend of themarket and precisely developed alcohol wet wipes, sanitary wipes, facial cleansing towel, compressed towel,disposable bath towel, mouthwash, mask and other non-traditional dry wipe products. In addition, high-end,high-margin non-traditional dry wipes have been positioned as a strategic category that will be prioritized in thefuture.
3. Professional and effective management team
The R&D, production, procurement, quality control, marketing and sales teams have successively introducedexcellent professionals since 2014. At present, the Company boasts the most outstanding R&D, production,branding and marketing teams in the industry. As such, its new product R&D, product quality, branding, sales andmarketing have been effectively solidified. Most of the mid-level managers of the marketing team are core,backbone employees who have served in the Company for more than five years, with high sense of loyalty andstrong professional competence. They can lead sales teams to work hard according to the strategic goals of theCompany and promote the healthy and stable development of various business indicators. The management teamof the Company has formulated long-term and strategic plans in line with actual situation of the Company,industry development level, and market demands. Moreover, the management team is capable of makingreasonable decisions on operation management issues with relation to R&D, production, marketing, investmentand financing, and effectively implementing such decisions. The excellent management team fundamentallyguarantees the Company’s competitiveness and sustainable development in the future.
4. Nationwide marketing network
The Company has been building and improving its marketing networks with reasonable layout based on its keenand strategic insights. It has guaranteed its profitability by expanding its channels from a single dealer channel in2015 to five channels at present, i.e. GT (General Trade), KA (Key Account), AFH (Away From Home), EC(E-Commerce), and RC (Retail Consumer). Its current marketing network covers most of the prefecture-level (andcounty-level) cities. Products are directly sold to counties and then distributed to towns. This helps achievesegmented and flat market operation and expand the dealer network.Additionally, while ensuring the smooth operation of other channels, the Company has established a professionale-commerce operation team, devoted more resources to e-commerce platforms, built and strengthened thecorresponding supply chain system, and intensified its routine operation management. At present, it has cementedlong-term strategic cooperation with mainstream well-known platforms. The Company has strengthened thelayout of emerging business models such as new retail, O2O and content marketing, while efforts have been
stepped up for livestream shopping and community group buying. In addition, it has developed an AFH serviceteam for AFH channels and customer bases to match the growing AFH market. In response to the market changesof modern KA channels, the Company actively adjusts strategies and strives to improve efficiency andeffectiveness of resource inputs.Attributable to a robust sales network plus quality and diversified products, the Company is able to constantlyconsolidate its market basis, improve consumer experience, and enhance brand reputation, which can help achievesustainable and stable growth in the future.
5. Nationwide layout of production bases
The Company has developed a production layout covering East China, South China, West China, North China,and Central China, through its subsidiaries including Jiangmen C&S, Yunfu C&S, Sichuan C&S, Zhejiang C&S,Hubei C&S, and Tangshan Subsidiary. Thanks to the nationwide layout of production bases, the Company hasnarrowed the distance to customers, reduced transportation costs, and enhanced transportation efficiency.
6. Product quality at an international level
The Company has always regarded product quality as its lifeline of survival and development ever since itsincorporation. First-class quality derives from first-class raw materials. Raw materials of the Company havepassed the ISO quality management system certification. Besides strict feed inspection procedures, it hasintroduced HACCP food hygiene and safety management system to control the hygiene and quality of productsfrom the source. Moreover, its products have passed ISO9001 quality management system certification which isthe strictest detecting system for product quality. The Company has observed internationally-advanced qualitymanagement system standards and utilized advanced processes, formulas, and control procedures in production toensure each technical performance indicator.
7. Good R&D capabilities
The Company is equipped with a complete product development system and the R&D department boasts strongindependent R&D capabilities and excellent product formula technologies. In recent years, the Company hascontinuously upgraded and optimized its products, in a bid to provide consumers with products that are of betterquality, more comfortable and more aligned with their individual needs. Products of the Company have extendedfrom household paper to cross-category household daily necessities including cleansing towel series, sanitarywipes, baby diapers, etc. The Company’s speed of bringing forth new products is at the forefront of the industry.
8. Advanced production equipment
The Company drives development with technological progress and has introduced advanced papermakingequipment and processing equipment from Austria, Germany, Italy, Japan and other countries. The diversifiedequipment can produce a variety of products that can meet the differentiated needs of consumers. As a first-tierenterprise, the Company occupies a leading position in the industry when it comes to the scale and automation ofproduction equipment. Advanced technology and highly automated equipment have strengthened the Company’s
efficiency, further satisfied ever-growing market demands, and served as an unstoppable driving force todevelopment.
9. Outstanding environmental protection awareness and technology
Along with the deepening of industrialization, the concept of environmental protection has been deeply rootedamong the people. The Company has adhered to the concept of "seeking green benefits and fulfilling corporatesocial responsibilities", and utilized advanced environmental protection technologies to pursue its objective ofenvironmental protection. Its waste water and gas emissions are superior to the national standards. The Companyactively fulfills its corporate social responsibilities and actively responds to China’s strategic goals of “carbonpeaking” in 2030 and “carbon neutrality” in 2060 by fully supporting and enforcing various environmentalprotection requirements of the government. In the future, the advantages and anti-risk capabilities of C&S inenergy conservation and emission reduction will be further highlighted.IV. Analysis of Principal Businesses
1. Overview
The situation of pandemic prevention and control was still challenging while international politics and economyremained complex during 2021. Under the influence of factors such as continual rise in material and energy prices,increasingly intensified market competition, consumers’ more sensitivity to prices and more cautious consumptionattitude, the household paper industry faces certain pressure and challenges in the short run. The management ofthe Company actively responds to such a severe situation through a series of effective actions like continuedoptimization of category structure, product innovation and upgrading, brand building and intensive channelcultivation, to promote the stable growth of sales. In 2021, the Company registered an operating income ofRMB9.150 billion, up by 16.95% over the previous year. Lower-than-expected sales prices of major products andrising material and energy prices led to the increase of production costs. Meanwhile, the Company activelyexpanded and developed channels and increased strategic investment in brand promotion. As a result, theprofitability has declined. The net profit attributable to shareholders of the Company was RMB581 million in2021, a year-on-year decrease of 35.85%.
(1) Continuously optimizing category structure and building channels in a deep and meticulous manner topromote steady sales growthDuring the reporting period, the Company continued to develop new products through innovations while adjustingthe structure of existing categories. With a focus on brand building, C&S has accelerated the introduction andimproved coverage of high-margin products, which has increased the sales shares of high-end, high-marginproducts and non-roll paper categories. Moreover, in order to adapt to changes in the consumption patterns ofconsumers, while ensuring the smooth operation of other channels, C&S has strengthened the layout and
development of new retail channels such as e-commerce and community group buying. Efforts have been steppedup in the construction of online distribution network and the upgrading of online operation and managementsystem. The Company actively embraces livestream shopping and community group buying and explores moreeffective ways of traffic attraction. All these have enabled better market performances of high-margin andinnovative products.
(2) Keeping up with new trends of consumption and establishing a standardized brand matrix throughbrand upgradingIn 2021, the Company optimized its three business segments of household paper, personal care products andquality health products around the three scenarios of household care, personal care and travel care. In thehousehold paper sector, driven by the dual brands of C&S and Sun, the Company continues to strengthen itshigh-end and young-oriented features and consolidate the influence of the parent brand on the sub-brand.Diversified professionals with rich experience in paper products and in beauty and skin care categories have beenintroduced, while the operation team for the Sun brand was re-organized with independent accounting, flatoperation and flexible innovation. A clearer product positioning and hierarchical sequence have been defined aftersorting out existing products, to create a more competitive product matrix. In addition, the Company alsoimproved the high-end product line, launched a new brand strategy and effectively integrated resources. All theseefforts have facilitated the quality development of the Company and its brands.
(3) Enhance product competitiveness with innovation and upgrading
Product quality is always put at the forefront of development. The Company boasts a complete productdevelopment system as well as strong independent R&D capabilities and excellent product formula technologies.In 2021, in line with market developments and consumers’ increasingly diversified product needs, the Companyinitiated innovative product development in household paper, quality health products and other business sectorsfor different usage scenarios and user groups. Efforts have been stepped up in the construction of internal R&Dteams and cooperation with external scientific research institutions. Product matrix and sequence in varioussectors were upgraded and optimized, with a focus on improving product quality and user experience. Design andinnovation iterations have better satisfied consumer needs which are well received by consumers. This furtherincreases user stickiness and consolidates product competitiveness.
(4) Improving organizational structure and building a talent development system to stimulate the vitality ofcorporate development2021 is an important year for the Company’s reform and strategic development. Talent team building is of crucialimportance to corporate development. Valuing and respecting employees and giving full play to their talents havebeen an eternal theme of the Company in the course of development. As such, C&S further improved itsorganizational structure, rank system and remuneration system and put in place diversified incentive mechanisms,to ensure the sound and standardized operation and management of the Company on one hand and fully stimulate
the vitality of employees and teams on the other. The Company attaches great importance to the cultivation ofemployees and always puts talent at the focal point of corporate development. Therefore, it constantly improvesthe talent management and development system and offers fair development channels and diverse education andtraining opportunities for employees. For this purpose, the Learning and Talent Development Center was officiallyestablished. The Company will establish a comprehensive internal talent pool for all levels, formulate an efficienttalent echelon training mechanism and actively transform learning outcomes. All these will help build a future-and learning-oriented team and activate the new engine of corporate development. A priority of the Company isteam cohesion and humanized care and management of employees. In order to enhance employees’ sense ofbelonging and happiness, C&S has built simple and efficient communication channels and adopted a series ofmeasures.
(5) Successfully completing second phase unlocking/exercise of the stock incentive plan, thereby stimulatingemployees’ enthusiasm for workDuring the reporting period, the Company successfully completed the unlocking of first-grant and reservedrestricted shares in the second unlock period as well as the exercise of stock options in the second exercise periodunder the 2018 Stock Option and Restricted Stock Incentive Plan. In this way employees could share the fruits ofcorporate development, which is conducive to stimulating their continual enthusiasm for work, tapping the valueof all employees and laying a solid foundation for the long-term stable development of the Company.
(6) Fulfilling corporate social responsibilities by supporting each other and passing on loveAs a national enterprise, C&S has never forgotten its original intention while forging ahead. The Company isenthusiastic about charity and actively fulfills corporate social responsibilities. In 2021, C&S was activelyinvolved in pandemic prevention and control, flood relief, poverty alleviation, and other causes of promotingsocial, economic and cultural development. In joint efforts with the China Charity Federation, Guangzhou CharityAssociation, Zhongshan Charity Association and other charity organizations of various regions, the Companydonated cash and materials with a cumulative worth over RMB14 million. Wherein, facing the severe flood inZhengzhou and other regions in July 2021, the Company, in cooperation with several charity organizationsincluding the Red Cross Society of China Zhengzhou Branch, quickly donated disaster relief materials with a totalvalue of more than RMB2.5 million to disaster-stricken areas. As such, it has been awarded titles of “2021 Top500 Chinese Corporate Philanthropists” and “2021 Top 500 Chinese Companies of Flood Relief Donations”. Inaddition, the Company teamed up with the Chinese Dance Sport Federation and the China Ballroom DanceFederation and organized the “C&S Cup” dance competition. Meanwhile, C&S and Shenzhen Media Foundationjointly established the “Learning Fund” to actively promote the educational public welfare undertaking. Moreover,the Company carried out in-depth cooperation with Zhongshan Women and Children’s Federation and jointlyestablished the “Women’s Home”, with a purpose of promoting the entrepreneurship of moms, conducting welfareactivities for children, caring for the health of women, and protecting the rights and interests of women andchildren.
| Item | 2021 (RMB) | 2020 (RMB) | YoY changes (%) | 2019 (RMB) |
| Operating income | 9,149,870,464.80 | 7,823,528,416.32 | 16.95% | 6,634,914,352.68 |
| Operating cost | 5,863,049,104.38 | 4,590,904,040.35 | 27.71% | 4,005,421,052.70 |
| Selling expenses | 1,986,544,514.02 | 1,544,562,244.71 | 28.62% | 1,369,553,843.95 |
| Administrative expenses | 341,144,204.30 | 364,914,344.30 | -6.51% | 294,516,937.35 |
| Finance expenses | -7,261,174.19 | -18,001,546.24 | 59.66% | 21,476,411.75 |
| Net cash flow from operating activities | 1,319,579,606.83 | 828,200,862.25 | 59.33% | 1,360,374,901.86 |
2. Operating income and cost
(1) Composition of operating income
Unit: RMB
| 2021 | 2020 | YoY changes | |||
| Amount | Proportion in operating income | Amount | Proportion in operating income | ||
| Total operating income | 9,149,870,464.80 | 100% | 7,823,528,416.32 | 100% | 16.95% |
| By industry | |||||
| Household paper | 8,658,308,172.33 | 94.63% | 7,499,908,172.64 | 95.86% | 15.45% |
| Personal care | 76,965,968.19 | 0.84% | 100,000,774.38 | 1.28% | -23.03% |
| Others | 414,596,324.28 | 4.53% | 223,619,469.30 | 2.86% | 85.40% |
| By product | |||||
| Finished products | 8,713,110,024.38 | 95.23% | 7,585,449,858.45 | 96.96% | 14.87% |
| Semi-finished products | 22,164,116.14 | 0.24% | 14,459,088.57 | 0.18% | 53.29% |
| Others | 414,596,324.28 | 4.53% | 223,619,469.30 | 2.86% | 85.40% |
| By region | |||||
| Domestic | 8,950,419,612.11 | 97.82% | 7,652,670,691.06 | 97.82% | 16.96% |
| Overseas | 199,450,852.69 | 2.18% | 170,857,725.26 | 2.18% | 16.74% |
| By sales model | |||||
| Traditional | 4,391,370,600.48 | 47.99% | 4,245,105,604.08 | 54.26% | 3.45% |
| Non-traditional | 4,343,903,540.04 | 47.48% | 3,354,803,342.94 | 42.88% | 29.48% |
| Others | 414,596,324.28 | 4.53% | 223,619,469.30 | 2.86% | 85.40% |
(2) Industries, products, regions or sales models that accounted for over 10% of the Company’s operatingincome or operating profit
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating cost | Gross profit margin | YoY changes of operating income | YoY changes of operating cost | YoY changes of operating gross profit margin | |
| By industry | ||||||
| Household paper | 8,658,308,172.33 | 5,455,519,068.17 | 36.99% | 15.45% | 25.63% | -5.11% |
| By product | ||||||
| Finished products | 8,713,110,024.38 | 5,481,370,370.28 | 37.09% | 14.87% | 25.51% | -5.34% |
| By region | ||||||
| Domestic | 8,950,419,612.11 | 5,740,188,110.38 | 35.87% | 16.96% | 27.57% | -5.33% |
| By sales model | ||||||
| Traditional | 4,391,370,600.48 | 2,858,854,536.20 | 34.90% | 3.45% | 14.65% | -6.36% |
| Non-traditional | 4,343,903,540.04 | 2,642,267,718.22 | 39.17% | 29.48% | 40.11% | -4.62% |
Where the statistical standards for the Company’s principal business data were adjusted in the reporting period, principal businessdata of the Company in the recent year adjusted as per statistical standards at the end of the reporting period
□ Applicable √ Not applicable
(3) Whether the Company’s goods sales income is greater than the labor service income
√ Yes □ No
| Industry | Item | Unit | 2021 | 2020 | YoY changes |
| Household paper | Sales volume | “0000” boxes | 14,758.23 | 11,691.68 | 26.23% |
| Production volume | “0000” boxes | 14,982.63 | 11,691.94 | 28.14% | |
| Inventory | “0000” boxes | 977.36 | 882.65 | 10.73% |
Reasons for YoY changes of relevant data over 30%
□ Applicable √ Not applicable
(4) Performance of major sales contracts and major procurement contracts already signed by the Companyas of the end of the reporting period
□ Applicable √ Not applicable
(5) Composition of operating costs
By industry and product
Unit: RMB
| Industry | Item | 2021 | 2020 | YoY changes | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Household paper | Principal business cost | 5,455,519,068.17 | 93.05% | 4,342,663,520.12 | 94.59% | 25.63% |
| Personal care | Principal business cost | 45,603,186.25 | 0.78% | 36,713,107.52 | 0.80% | 24.21% |
| Others | Other business cost | 361,926,849.96 | 6.17% | 211,527,412.71 | 4.61% | 71.10% |
Unit: RMB
| Product | Item | 2021 | 2020 | YoY changes | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Finished products | Principal business cost | 5,481,370,370.28 | 93.49% | 4,367,115,588.55 | 95.13% | 25.51% |
| Semi-finished products | Principal business cost | 19,751,884.14 | 0.34% | 12,261,039.09 | 0.27% | 61.09% |
| Others | Other business cost | 361,926,849.96 | 6.17% | 211,527,412.71 | 4.61% | 71.10% |
Description: None
(6) Whether there are changes to the consolidated scope during the reporting period
√ Yes □ No
As of December 31, 2021, the Company has 28 subsidiaries that are included in the consolidated scope, asdetailed in “Note IX. Equities in Other Entities”. Compared with last year, ten subsidiaries have been newly addedinto while one subsidiary has been deleted from the consolidated scope during the reporting period. For details,see “Note VIII. Changes in Consolidated Scope”.
(7) Whether there are significant changes or adjustments to the Company’s businesses, products or servicesduring the reporting period
□ Applicable √ Not applicable
(8) Major customers and suppliers
Major customers of the Company
| Total sales to the top five customers (RMB) | 2,837,641,647.30 |
| Proportion of sales to top five customers in total annual sales | 31.01% |
| Proportion of sales to related party among the top five customers in total annual sales | 0.00% |
Information of the top five customers of the Company
| No. | Name of customer | Sales amount (RMB) | Proportion in total annual sales |
| 1 | 1st | 1,077,211,583.41 | 11.77% |
| 2 | 2nd | 760,468,402.80 | 8.31% |
| 3 | 3rd | 532,628,247.02 | 5.82% |
| 4 | 4th | 269,613,897.11 | 2.95% |
| 5 | 5th | 197,719,516.96 | 2.16% |
| Total | -- | 2,837,641,647.30 | 31.01% |
Other description of major customers
√ Applicable □ Not applicable
There is no related party relationship between the top five customers and the Company.Major suppliers of the Company
| Total purchase amount from the top five suppliers (RMB) | 2,394,581,210.24 |
| Proportion of the total purchase amount from the top five suppliers in total annual purchase amount | 46.60% |
| Proportion of purchase amount from related parties among the top five suppliers in total annual purchase amount | 0.00% |
Information of the top five suppliers of the Company
| No. | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase amount |
| 1 | 1st | 1,075,003,945.68 | 20.92% |
| 2 | 2nd | 562,316,616.08 | 10.94% |
| 3 | 3rd | 341,035,034.55 | 6.64% |
| 4 | 4th | 217,354,596.68 | 4.23% |
| 5 | 5th | 198,871,017.25 | 3.87% |
| Total | -- | 2,394,581,210.24 | 46.60% |
Other description of major suppliers
√ Applicable □ Not applicable
There is no related party relationship between the top five suppliers and the Company.
3. Expenses
Unit: RMB
| 2021 | 2020 | YoY changes | Description of significant changes |
| Selling expenses | 1,986,544,514.02 | 1,544,562,244.71 | 28.62% | |
| Administrative expenses | 341,144,204.30 | 364,914,344.30 | -6.51% | |
| Finance expenses | -7,261,174.19 | -18,001,546.24 | 59.66% | Financial expenses: This item recorded an increase of RMB10,740,372.05 or 59.66% in the reporting period compared with the same period in 2020, mainly owing to the increase in exchange losses and gains during the reporting period. |
| R&D expenses | 211,964,212.18 | 190,298,633.61 | 11.39% |
4. R&D investment
√ Applicable □ Not applicable
| Name of main R&D project | Project purpose | Project progress | Intended goals | Expected impact on the future development of the Company |
| Development and launch of the natural wood kitchen paper | Use high-yield pulp to improve paper performance and advocate the concept of environmental protection. | Completed | All performance indicators are up to design requirements and better than national standards; new products are unveiled. | The natural wood kitchen paper series have been developed and launched. The series advocate environmental protection and have enriched the kitchen paper category of the Company. In addition, the series have helped tap the natural wood high-absorbent paper towel markets in overseas such as South Korea. |
| Development of antibacterial tissue paper and toilet paper products | With the raging of the pandemic, offer personal cleansing products to consumers. The product can remain bacteriostatic and clean after wiping, while the discarded objects are environmental friendly and can inhibit the growth of bacteria. | Completed | The antibacterial rate of the tissue reaches 90%; new products are unveiled. | The antibacterial series (tissue handkerchiefs, soft-packaged and box-packaged facial tissues, paper rolls and paper towels) have been developed, which have enriched product categories and improved product competitiveness in the context of the pandemic. |
| Development of the water-in-oil tissue handkerchief series | Further improve product quality on the basis of the oil painting series. | In progress Progress within the planned timeline | Water locking + wettable | The oil painting mini tissue handkerchiefs have become one of the Company’s highest-end and best-selling products. |
| Development of the Lotion series | Use shea butter and Prinsepia utilis Royle oil in the Lotion series, to add to the selling points of and upgrade the level of products. | Completed | Improve the skin feeling of consumers and ensure stable formulation compatibility. | The Lotion series (portable facial tissue and facial tissue products) contain shea butter and Prinsepia utilis Royle oil, which has improved product competitiveness. |
| Replacing plastic packaging with paper packaging for commercial channel products | Respond to the “dual-carbon” policy and meet the environmental protection requirements for product export. | Completed | Obtain export orders and gradually promote such replacement in the packaging of other domestic products. | Pursue green development and fulfill corporate social responsibilities. Use paper to replace plastic and achieve mass production and sales of paper rolls, tissues, paper towels and napkins sold in commercial channels, to improve product competitiveness in the international market. |
| Launch of the 100g Cleansing Towel series | Develop a face towel that uses pure plant fiber while completely surpassing traditional towels in terms of performance and experience. | Completed | The 100g Cleansing Towel series feature plant fiber and cool diamond pattern. The products are stylish with strong cleansing effect but yet soft. | They are well liked by consumers with sales having doubled. |
Information on R&D personnel of the Company
| 2021 | 2020 | Change ratio | |
| Number of R&D personnel | 409 | 397 | 3.02% |
| Proportion of R&D personnel | 5.81% | 6.00% | -0.19% |
| Educational structure of R&D personnel | —— | —— | —— |
| Bachelor | 69 | 67 | 2.99% |
| Master | 1 | 1 | 0.00% |
| Associate degree and lower | 339 | 329 | 3.04% |
| Age structure of R&D personnel | —— | —— | —— |
| Under 30 | 95 | 89 | 6.74% |
| 30~ 40 | 190 | 193 | -1.55% |
| Above 40 | 124 | 115 | 7.83% |
R&D investment of the Company
| 2021 | 2020 | Change ratio | |
| Amount of R&D investment (RMB) | 211,964,212.18 | 190,298,633.61 | 11.39% |
| Proportion of R&D investment in total operating income | 2.32% | 2.43% | -0.11% |
| Amount of capitalized R&D investment (RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment in total R&D investment | 0.00% | 0.00% | 0.00% |
Reason for and impact of marked changes in the composition of the Company’s R&D personnel
□ Applicable √ Not applicable
Reason for marked changes in the proportion of R&D investment in total operating income over the last year
□ Applicable √ Not applicable
Reason for marked changes in the proportion of capitalized R&D investment and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
| Item | 2021 | 2020 | YoY changes |
| Sub-total of cash inflow from operating activities | 9,097,936,828.93 | 7,802,290,765.25 | 16.61% |
| Sub-total of cash outflow from operating activities | 7,778,357,222.10 | 6,974,089,903.00 | 11.53% |
| Net cash flow from operating activities | 1,319,579,606.83 | 828,200,862.25 | 59.33% |
| Sub-total of cash inflow from investing activities | 61,466,670.02 | 179,801,840.88 | -65.81% |
| Sub-total of cash outflow from investing activities | 708,619,852.14 | 561,677,417.02 | 26.16% |
| Net cash flow from investing activities | -647,153,182.12 | -381,875,576.14 | -69.47% |
| Sub-total of cash inflow from financing activities | 222,066,759.33 | 411,994,677.00 | -46.10% |
| Sub-total of cash outflow from financing activities | 1,141,254,963.40 | 481,103,146.23 | 137.22% |
| Net cash flow from financing activities | -919,188,204.07 | -69,108,469.23 | -1230.07% |
| Net increase in cash and cash equivalents | -252,236,460.02 | 374,037,282.75 | -167.44% |
Major influencing factors for significant YoY changes in relevant data
√ Applicable □ Not applicable
1. Net cash flow from operating activities: This item recorded an increase of RMB491,378,744.58 or 59.33% inthe reporting period compared with 2020, mainly owing to the increase in sales revenue during the reportingperiod.
2. Net cash flow from investing activities: This item recorded a decrease of RMB265,277,605.98 or 69.47% in thereporting period compared with 2020, mainly owing to the decrease in the received principal of wealthmanagement products and the increase in payment for engineering equipment during the reporting period.
3. Net cash flow from financing activities: This item recorded a decrease of RMB850,079,734.84 or 1230.07% inthe reporting period compared with 2020, mainly owing to the decrease in cash received from borrowings and theincrease in repurchased shares during the reporting period.Reason for significant differences between the net cash flow from operating activities and the net profit of the year during thereporting period
□ Applicable √ Not applicable
V. Analysis of Non-principal Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | Proportion in total profit | Explanation of reason | Is it consistently applied? | |
| Investment income | 365,973.72 | 0.05% | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds | No |
| Profit and loss from changes in fair value | 0.00% | |||
| Asset impairment | -27,791,339.98 | -4.16% | Provision for impairment of inventories or fixed assets | No |
| Non-operating income | 3,810,360.34 | 0.57% | Income from fine and compensation, others, and government grants | No |
| Non-operating expense | 12,059,080.49 | 1.81% | External donations and others | No |
VI. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: RMB
| End of 2021 | Beginning of 2021 | Proportion changes | Description of significant changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 875,052,493.12 | 11.63% | 1,125,196,199.56 | 15.02% | -3.39% | |
| Accounts receivable | 1,177,831,399.28 | 15.66% | 1,051,423,939.59 | 14.04% | 1.62% | |
| Contract assets | 0.00% | 0.00% | 0.00% | |||
| Inventory | 1,467,631,516.95 | 19.51% | 1,661,274,495.32 | 22.18% | -2.67% | |
| Investment property | 33,138,481.74 | 0.44% | 34,575,365.94 | 0.46% | -0.02% | |
| Long-term equity investment | 0.00% | 0.00% | 0.00% | |||
| Fixed assets | 3,129,371,506.40 | 41.60% | 2,792,587,302.21 | 37.28% | 4.32% | |
| Construction work in progress | 134,875,696.94 | 1.79% | 275,904,617.95 | 3.68% | -1.89% | Construction work in progress: This item recorded a decrease of RMB141,028,921.01 or 51.12% in the reporting period compared with the beginning of 2021, mainly owing to the fact that certain construction work in progress reached the usable state and was thereby transferred to fixed assets during the reporting period. |
| Right-of-use assets | 14,300,520.77 | 0.19% | 12,852,715.53 | 0.17% | 0.02% | |
| Short-term borrowings | 0.00% | 142,942,941.34 | 1.91% | -1.91% | Short-term borrowings: This item recorded a decrease of RMB142,942,941.34 or 100.00% in the reporting period compared with the beginning of 2021, mainly owing to the decrease in short-term loans from banks during the reporting period. | |
| Contract liabilities | 164,360,443.34 | 2.18% | 137,333,617.40 | 1.83% | 0.35% | |
| Long-term | 0.00% | 0.00% | 0.00% | |||
| borrowings | ||||||
| Lease liabilities | 5,565,928.14 | 0.07% | 8,089,819.67 | 0.11% | -0.04% | Lease liabilities: This item recorded an increase of RMB2,523,891.53 or 31.20% in the reporting period compared with the beginning of 2021, mainly owing to the increase in lease liabilities that are reclassified as due within one year that during the reporting period. |
High proportion of overseas assets
□ Applicable √ Not applicable
2. Assets and liabilities measured at fair value
□ Applicable √ Not applicable
3. Restriction of asset rights as at the end of the reporting period
| Item | December 31, 2021 | Reason for restriction |
| Monetary funds (RMB) | 77,254,817.42 | Security deposits for issuing letter of credit and notes |
| Total (RMB) | 77,254,817.42 |
VII. Analysis of Investment
1. Overview
√ Applicable □ Not applicable
| Investment amount during the reporting period (RMB) | Investment amount of previous year (RMB) | Changes |
| 708,619,852.14 | 561,677,417.02 | 26.16% |
2. Major equity investment during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investment during the reporting period
□ Applicable √ Not applicable
4. Financial asset investment
(1) Security investment
□ Applicable √ Not applicable
The Company did not invest in securities during the reporting period.
(2) Derivative investment
√ Applicable □ Not applicable
Unit: RMB10,000
| Name of the operator for derivative investment | Related relationship | Whether related party transaction | Type | Initial investment amount | Start date | End date | Investment amount at the beginning of the period | Amount bought in during the period | Amount sold during the period | Amount of impairment provision (if any) | Investment amount at the end of the period | Proportion of the investment amount at the end of the period in the Company’s net assets at the end of the period | Actual profit or loss amount during the period |
| Industrial Bank | None | No | Sell USD put option | 584.39 | November 22, 2021 | November 30, 2021 | 0 | 584.39 | 584.39 | 0 | 0 | 0.00% | 1.43 |
| Total | 584.39 | -- | -- | 0 | 584.39 | 584.39 | 0 | 0 | 0.00% | 1.43 | |||
| Source of fund | Self-owned fund | ||||||||||||
| Litigation involved (if applicable) | Not applicable | ||||||||||||
| Disclosure date of the announcement regarding the Board’s approval of derivative investment (if any) | December 15, 2020 | ||||||||||||
| Disclosure date of the announcement regarding the shareholder meeting’s approval of derivative investment (if any) | None | ||||||||||||
| Risk analysis and control measures of derivative positions during the reporting | Risk analysis: 1. Price fluctuation risk: Price fluctuations of underlying interest rates and exchange rates may lead to price changes of the financial derivatives, thereby causing losses; 2. | ||||||||||||
| period (including but not limited to market risks, liquidity risks, credit risks, operational risks and legal risks) | Internal control risk: Derivative trading is highly specialized and complicated, which may result in risks arising from poor internal control; 3. Liquidity risk: Transaction may become unable to be completed due to insufficient market liquidity; 4. Performance risk: The derivative contract may become unable to be fulfilled at maturity, thereby leading to default risk; 5. Legal risk: Relevant laws and regulations may be changed or the counterparty may violate relevant laws and regulations such that the contract cannot be normally executed, causing losses to the Company. Control measures: 1. Select financial derivatives with strong liquidity and controllable risks for trading; 2. Derivative trading should follow the primary principle of hedging for risks caused by exchange rate fluctuations to the greatest extent; operation strategies will be adjusted in a timely manner according to market conditions, to better hedge risks; 3. Carefully choose the counterparty of the derivative trading; 4. Assign specified personnel to continuously monitor the derivative contracts who will report cases of great market fluctuations or increased risks or significant floating profits or losses to the management of the Company timely, so as to respond actively; 5. Only conduct derivative trading with qualified financial institutions such as large commercial risks, to avoid possible legal risks. |
| Changes in market price or fair value of invested derivatives during the reporting period; analysis on fair value of derivatives should disclose the specific methods used as well as the setting of relevant assumptions and parameters | None |
| Whether there are significant changes to the accounting policies and specific accounting principles for derivatives during the reporting period compared with previous reporting period | No |
| Opinions of independent directors on the Company’s derivative investment and risk control | The Company and its subsidiaries use foreign currency to pay for raw material purchases, so when the exchange rate fluctuates, exchange gains and losses will have a certain impact on the Company’s business performance. Therefore, it is reasonable for the Company and subsidiaries to use financial tools to hedge exchange rate and interest rate risks. Moreover, the Company has formulated the Management System on Financial Derivative Trading to effectively regulate derivative investment and control derivative trading risks. There is no situation that damages the interests of shareholders of the Company. |
5. Use of raised funds
□ Applicable √ Not applicable
No raised funds were used by the Company during the reporting period.
VIII. Major Asset and Equity Sales
1. Sales of major assets
□ Applicable √ Not applicable
The Company did not sell major assets during the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
IX. Analysis of Main Holding and Joint-stock Companies
√ Applicable □ Not applicable
Description of main subsidiaries and of joint-stock companies which have influence on the Company’s net profit by over 10%
Unit: RMB
| Company name | Company type | Principal businesses | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Jiangmen C&S | Subsidiary | R&D, production, and sales (including online sales): household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; sales (including online sales) of Class I and II medical devices. (The above items do not involve special management measures for the access of foreign investment) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments) | RMB345,985,032 | 1,780,552,592.09 | 1,480,447,512.18 | 1,549,237,057.08 | 147,293,548.73 | 126,564,846.03 |
| Yunfu C&S | Subsidiary | R&D, production, wholesale, retail and online sales: household paper, sanitary products, maternal and infant products, daily necessities, cosmetics, medical devices, sanitary materials, non-woven fabrics and products, polymer materials and products, daily sundries, and disinfection supplies (excluding hazardous chemicals); wholesale, retail and online sales: food; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or | RMB650 million | 2,203,509,133.31 | 1,356,504,806.54 | 3,184,105,149.86 | 287,089,326.26 | 246,098,218.58 |
| involving administrative approval); warehousing services (limited to warehouses qualified in fire protection without hazardous chemicals). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||||
| Sichuan C&S | Subsidiary | Licensed items: production of sanitary products and disposable medical supplies; import and export of goods (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments, and the specific business items are subject to the approval document or the permit issued by relevant department). General items: sales of sanitary products and disposable medical supplies; sales of personal hygiene products; sales of daily necessities; manufacture of paper products; sales of paper products; manufacture of paper; manufacture of daily chemical products; sales of daily chemical products; sales of Class II medical devices; sales of Class I medical devices; manufacture of industrial textile products; sales of industrial textile products; manufacture of maternal and infant products; sales of maternal and infant products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) | RMB100 million | 1,187,672,569.40 | 868,180,562.01 | 2,023,676,110.69 | 130,603,235.26 | 111,230,529.50 |
| Hubei C&S | Subsidiary | Licensed items: production of sanitary products and disposable medical supplies; production of cosmetics (for items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to the approval document or the permit issued by competent department). General items: sales of sanitary products and disposable medical supplies; retail of cosmetics; wholesale of cosmetics; manufacture of paper; sales of personal hygiene products; sales of knitwear; manufacture of maternal and infant products; sales of maternal and infant products; sales of paper products; manufacture of paper products; sales of daily necessities; sales of daily chemical products; sales of disinfectants (excluding hazardous chemicals); Internet sales (excluding the sales of commodities requiring a permit); sales of Class I medical devices; sales of Class II medical devices; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | RMB200 million | 1,781,450,251.71 | 460,785,928.00 | 1,782,485,499.79 | 113,996,786.97 | 85,403,378.15 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
Description of main holding and joint-stock companies
X. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
XI. Outlook of the Company’s Future Development(I) Development strategy and planning of the CompanyAdhering to the goal of “building a century-old enterprise and creating a market value of hundred billion”, theCompany practices the “targeted, people-oriented” action principle by bearing consumers, partners and employeesin mind. It will continue to improve shareholder returns, optimize the experience of and reputation amongconsumers, and elevate the sense of belonging and happiness of employees.The Company has defined the goal of strengthening basic management from 2022 to 2024. Specifically, it willcomprehensively streamline and optimize the business processes, management system and structure of eachoperation and management sector including sales, marketing, finance, production, procurement and supply chain,gradually improve IT and data construction, and gradually enhance HR management and talent training andcultivation mechanism. In addition, it will gradually establish driven financial management and supply chainmanagement systems, gradually set up an open, fair, efficient and professional procurement system, andcomprehensively strengthen product quality and safe production management. Moreover, the Company will stepup efforts for audit supervision, comprehensively enhance basic management capabilities and improve the refinedmanagement level, while reducing costs and increasing efficiency. All these will help consolidate the foundationfor its long-term, healthy development.The Company will always adhere to the core business of household paper and continuously solidify productlayout and market competitiveness in the industry. Meanwhile, related diversified categories will be tried out assupplements.As a member of the first echelon in China’s household paper industry, the Company always puts product qualityin the first place as it firmly believes that product is the lifeline of an enterprise. That is why it has been insistingon using advanced equipment and first-class raw materials to produce high-quality products. The Company willcontinue to improve its independent research and development capabilities and strengthen cooperation withexternal research and development institutions to enrich product formulas, optimize production processes andmeet multi-level and differentiated market demands.The Company will continue to optimize product structure and consolidate the coordinated management oftraditional paper tissue, personal health care and quality health products. Moreover, high-end, high-marginnon-traditional dry wipes have been positioned as a strategic category that will be prioritized in the future.Resources have been integrated to promote high-end, high-margin products such as the Oil Painting series, Lotionseries, kitchen towels, wet toilet paper, facial tissues, Dolemi sanitary pads, and disposal products, which intendsto drive the continual growth of their shares and steadily improve the Company’s gross profit margin and
profitability.The Company will continue to enforce the management requirements of building first-class brands, systems andstaff team. Under the guiding marketing idea of “progressing through multiple channels, improving both volumeand profit, transforming way of thinking while maintaining the correct and evolving the new”, the Companystrives to a build a marketing team and marketing concept featuring co-existence, co-prosperity, co-constructionand co-development. By comprehensively optimizing product power, channel power and organizational powerand consolidating basic business functions and marketing standardization, it has improved the execution andorganizational strengthen of the marketing team in an all-round manner. Moreover, the Company constantlyenhances its data-driven management ability and continuously improves and enriches incentive mechanisms forsales teams to seize channel network and terminal resources.In line with market environment and sales progress, the Company will deploy production capacity in an orderlymanner to achieve a dynamic balance between production and sales.Horizontal integration and strategic alliance with key customers and leading enterprises will be continued by theCompany.(II) Major risks faced by the Company
1. Risk of great fluctuations in pulp prices
Pulp is an international bulk raw material and its price is obviously affected by the world economic cycle. Withthe repeated outbreak of the pandemic in early 2021, pulp imports encountered unstable shipping schedules andblocked transportation. Coupled with factors such as RMB appreciation, buying inflation and mismatch betweensupply and demand, pulp prices first surged and then eased back. Pulp is the primary raw material of theCompany’s production, accounting for 40%-60% of the total production costs. Therefore, substantial fluctuationsin pulp prices pose a risk to the Company.
2. Risk of exchange rate fluctuation
The import of machinery equipment and pulp and the export of products to overseas market of the Company aremainly settled in USD, HKD, and EUR. Since exchange rates fluctuate under the impact of the internationaleconomic situation, the Company faces exchange rate risks.
3. Risk of regional market competition
Household paper is a vast market in China in terms of both geography and market space. Given the low unit value,transportation expenses taking up a large part of the sales price, and limitations of the transportation radius, themain competition in the household paper industry lies in regional markets. High-end, mid-end, and low-endproducts compete in regional markets, with the influence of spending power and consumption habit. Judging from
the development trend of the industry, mid- and high-end household paper of national brands has morecompetitive edge. However, at present, some regional brands have an advantage in some regional markets.Compared with overseas counterparts, China’s household paper industry requires continued integration. TheCompany embraces production bases and a sales network across the country and offers mid- and high-endproducts under national brands. Nevertheless, it is inescapable from the risk of regional market competition.
4. Risk of industrial policies
Stricter requirements have been raised for the papermaking industry in the aspects of scale, technology, equipment,and environmental protection, as multiple industry plans and supporting policies have been successively issued byrelevant departments, including the Papermaking Industry Development Policy, the Notice on the Management ofElevated Source Pollution Discharge Permits in Thermal Power and Papermaking Industries and Pilot Cities ofBeijing-Tianjin-Hebei Region, and the Opinions of China Paper Association on Fourteenth Five-year Plan for thePapermaking Industry. Particularly, a number of measures have been introduced through environmental protectionpolicies to drive the all-round, coordinated, and sustainable development of the household paper industry,including 1) optimizing the industrial distribution to reasonably allocate resources and promoting clean productionto preserve the ecological environment; 2) pushing energy conservation and emission reduction to shut downoutdated production facilities, and adjusting product structure and improving product quality; 3) developingresource-saving models to advocate green consumption; and 4) optimizing enterprise structure and driving M&Aand restructuring. These policies are designated to strengthen household paper industry concentration, closebackward production facilities, and optimize resource allocation. The Company, as an enterprise in the firstechelon of the domestic household paper industry, is underpinned by national policies related to the sustainabledevelopment of the household paper industry. Precisely because of this, industrial policy adjustment, if any, willimpact the production and operations of the Company to some extent.
5. Risk of safe production
Most of the materials involved in the household paper industry are flammable, including the main raw material ofpulp, the main packing materials of plastic-film packing bags and cartons, the semi-finished product of body paper,and finished products. Due to the characteristics of low unit value and large market consumption, household papermanufacturers have to keep a mass of pulp, packing materials, and semi-finished and finished products from theentry of raw materials into the plant to the delivery of products to the market. Thus, fire can cause enormouslosses to such manufacturers. In view of this, the Company has formulated strict fire management regulations forraw materials and semi-finished and finished products, established a full-time safety management department,equipped adequate fire protection equipment in production areas, and bought full insurance for risky properties.As such, the Company’s fire safety risk is low. In addition, a large number of production lines have been put intouse, which may pose certain occupational health hazard and cause harm to the occupational health of employees.
In response to possible occupational health hazards, the Company, at the equipment design and procurementstages, requires suppliers to carry out intrinsic safety design and fulfill the protection measures during theinstallation process. At the same time, the Company has passed the ISO45001 occupational health and safety(OHS) management system and continues to maintain its effective operations to reduce the occupational healthand safety risks of employees. Even though the execution of all these measures has enabled the overall safeproduction risk to be controllable, the Company still faces certain safe production risks.
6. Risk of logistics transportation
In 2021, the COVID-19 pandemic has hindered domestic and foreign logistics transportation by sea and land tovarying degrees, affecting both the Company’s procurement and sales and upstream suppliers and downstreamdealers. In other words, the Company has suffered from multiple dimensions. Though impacts of the pandemic arephased and temporary, risks are unavoidable for the Company as being at the mid- and downstream of thehousehold paper industry chain.
XII. Reception of Researches, Communications, Interviews and Other Activities
√ Applicable □ Not applicable
| Reception time | Reception location | Reception method | Type of reception object | Reception object | Main content discussed and information provided | Index of the basic situation of the survey |
| April 28, 2021 | / | Telephone communication | Institution | Aviva-COFCO Life Insurance, CITIC Securities, China Securities, ZTF Securities, Zhongtai Securities self-owned equity investment, CS Richland Asset, CICC Asset Management, Zheshang Securities, Topassets Management, CMS Asset Management, China Merchants Fund, Changsheng Fund Management, Changjun Capital Management (Shenzhen) Co., Ltd., Changjiang Securities, Changjiang Pension Insurance Co., Ltd., Great Wall Securities, Chang’an Assets, Chang’an International Trust, Golden Trust Sinopac Fund Management Co., Ltd., Genesis Capital, Yinhua Fund Management, Galaxy AMC, Symbol Investment (Shanghai) Co., Ltd., Industrial Securities, Xingtai Capital Management Limited, New Silk Road Investment, New China Fund, Atlantis Investment Management, Southwest Securities, Longwin Investment, Wanlian Securities, TF Securities, First-Trust Fund Management, Manulife Teda Fund Management, Taida Dingsheng Investment Management, Shenzhen Minsen Investment, Shenwan Hongyuan Securities, Shanghai Aerovelocity Asset Management CO., Ltd., Shanghai Yijinghui Asset, Shanghai Xianhu Investment Management Co., Ltd., Shanghai Qinyuan Investment, Shanghai Jujin Investment Co., Ltd., Perseverance Asset Management L.L.P., Orient Securities Asset Management Company Limited, Shanghai Chongshan Investment Co., Ltd., Shanghai CR Assets Investment Management Co., Ltd., Pinpoint Asset Management Limited, Taihang Capital Management, Qian Hai Life Insurance Co., Ltd., First Seafront Fund, AXA SPDB Investment Managers, Ping’an Asset Management Co., Ltd., Penghua Fund Management Co., Ltd., Ningbo High-Flyer Quant | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| Investment Management Partnership (Limited Partnership), China Southern Asset Management Co., Ltd., Morgan Stanley Fund, Orchid Asia, Commando Capital, Kaiyuan Securities, First Seafront Fund, Jingheng Investment, Invesco Great Wall Fund, Invesco Investment, Harvest Fund Management Co., Ltd., CoStone Capital, China Universal Asset Management, HSBC Bank, HSBC Qianhai Securities Limited, China Everwin Asset, Huaxi Securities, Huatai Securities, Huarong Securities Fund Department, Huachuang Securities, HuaAn Securities, HuaAn Fund Management Co., Ltd., Citibank, Hongde Fund Management Co., Ltd., Hongta Securities, Haitong Securities, Sinolink Securities, GH Shining Asset Management, Sealand Securities Asset Management Subsidiary, GuoDu Securities, GF Securities, GF Fund, JH Investment Management Co., Ltd., Everbright PGIM Fund Management Co., Ltd., Granford Capital, Gaozhi (Shanghai) Investment Management Co., Ltd., Goldman Sachs Asset Management, Crown Nice Investments, Huarong Securities Fund Department, Hua Chuang Securities, HuaAn Securities, HuaAn Funds, Hongde Fund, Founder Securities self-trading, FountainCap Research & Investment, Northeast Ronghui Securities Asset Management Co., Ltd., Aistar Ventures, Bohai Life Insurance Co., Ltd., Bin Yuan Capital, AceCamp International Limited, Beijing ZhiKai Investment Management Co., Ltd., Beijing Keywise Capital Management Limited, Kendall Square Capital, Beijing Hongcheng Capital Co., Ltd., Essence Securities, Shanghai Ivy Assets Management Co., Ltd., WT Asset Management Limited, Vontobel Asset Management Asia Pacific Limited, TORQ, Tiger Pacific Capital L.P., Schonfeld, Point72 Asset Management, Oasis Fund, Morgan Stanley, Millennium Capital, LYGH Capital, JK Capital, Golden Nest | ||||||
| April 29, 2021 | / | Telephone communication | Institution | LyGH Capital, R-Rock Investment, Fujian Haoshan Asset Management Co., Ltd., Orchid Asia Investment Group, Goldman Sachs Investment Management, Yijinghui Asset, Ningbo High-Flyer Quant Investment Management Partnership (Limited Partnership), CSFG Asset Management | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| Management Co., Ltd., Rorschach Capital, Virtue First Investment, Banyan Partners, Beijing Aotianqi Investment Management Co., Ltd., Shining Stone Capital, Bank of China Investment Management, Shelwood Fund, Orchid Asia, Balings Fund, Lide Investment Holding, Pinebridge Investment, Eurizon Capital, TX Capital, Ankaa Capital, HSZ Investment, SPQ Asia Capital, Bosheng, Sunshine Insurance, Fidelity, Golden Nest, ROC, Knight Investment, Pinpoint, Dongxing Securities, Point72, DymonAsia Capital, Dawn Capital, Destination Capital, Manulife, EFG Asset Management, Golden Nest, Orchid Asia, ICBCI Investment Management, Citibank, Oberweis, Fuh Hwa Trust, Fountain Cap, WT, Macquarie Investment Management Business Trust, Athena Capital, Kenrich Partners, Bran Asset Management, Millennium Capital Management (Hong Kong) Limited, Goldman Sachs Asset Management, Tiger Pacific Capital LP, JK Capital Management Ltd., Citi Private Bank, Everest 8 capital | ||||||
| May 07, 2021 | / | Others | Others | Investors attending the online meeting of 2020 annual report briefing | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| August 31, 2021 | / | Telephone communication | Institution | Southern Asset Management, E Fund, Springs Capital, Harvest Fund, Invesco Great Wall Fund, Bank of Communications Schroders, Wells Fargo Fund, Dongfanghong Asset Management, Rongtong Capital, BOSC Asset, TEDA Manulife, Essence Securities, CICC Asset Management, China Post Life Insurance, China Life Security Fund, Zheshang Fund, Wanjia Fund, Jiahe Fund, China Europe Fund, Australia Bank Capital, Bin Yuan Capital, Bohai Huijin Asset Management Co., Ltd., Goldman Sachs Assets, Huabao Captial Fund, Huili Assets, Jiulian Assets, Liger Capital, Morgan Stanley Fund, Changxin Fund, Changsheng Fund, HuaAn Funds, Lion Fund, Koike Capital, New Silkroutes, ICBC Credit Suisse, Galaxy Fund, Zheshang Securities self-trading unit, Rabbit Fund, Centennial Asset, CS Richland | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| Asset, Red Elephant Investment, Gao Yi Assets, Magic Square Investment, Guohai Asset Management, First Seafront Fund, SWS MU Fund Management, Everbright Prudential, Qinyuan Investment, CITIC Asset Management, East Money Fund, Chengan Assets, Caitong Asset Management, Yijinghui, Bohai Huijin Securities, Haitong Securities self-trading unit, Kaiyuan Light Industry, Kaiyuan Securities, Guojin Securities, Guotai Junan Securities, Huatai Securities, HSBC Qianhai Securities, ZTF Securities, Debon Securities, China Merchants Securities, Zheshang Securities, Hualin Securities, Golden Nest Capital, Alliance Bernstein, Lazard, Wfund, Greencourt, Goldennest, Anatole, Pinpoint, Point72, Y2 Capital | ||||||
| October 27, 2021 | / | Telephone communication | Institution | Wisdomshire, Jiufu Fund, Essence Securities self-trading unit, Xiangsheng Asset, Guolian Life, Chengsheng Investment, ICBC Credit Suisse, Galaxy Fund, Wanjia Fund, Industrial Securities Global, E Fund, Great Wall Wealth Asset Management, Mingyu Asset, United Vision Asset Management, China Asset Management, Qiyao Investment, Century Securities, CS Richland Asset, Soochow Securities, China Merchants Securities, Southern Asset Management, Caitong Asset Management, Zheshang Securities self-trading unit, Magic Square Quantitative, Danyi Investment, Xinhua Asset, Goldman Sachs, Red Elephant Investment, Everbright Securities Asset Management, Generali China, Wanlian Securities, Chengan Assets, CCB Pension, Taikang Asset Management, Huatai Assets, China Europe Fund, China Life Security Fund, Chongyun Investment, HSBC Jintrust, Xingyin Wealth Management, Morgan Stanley, Ping An Asset Management, Huaan Securities self-trading, Bank of China Securities Asset Management, Ruiyang Investment, Huashang Fund, Morgan Stanley Huaxin Fund Management, China Post Life Insurance, Zheshang Fund, Everbright Prudential, Debon Fund, Honest Asset Management Co., Ltd., Minsheng Royal Fund Management, Shanghai Guandao Asset Management Co., Ltd., CICC Asset Management | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
Section IV Corporate GovernanceI. Basic Situation of Corporate Governance
1. Basic situation of corporate governance
During the reporting period, the Company has been operating in strict compliance with requirements of theCompany Law, the Securities Law, the Code of Corporate Governance for Listed Companies, the RulesGoverning the Listing of Shares on Shenzhen Stock Exchange, and other normative documents promulgated byChina Securities Regulatory Commission (CSRC) and Shenzhen Stock Exchange (SZSE). To standardize actions,the Company has developed the Articles of Association, constantly improved its corporate governance structure,and optimized its internal management systems. Its corporate governance structure meets requirements set out inrelevant normative documents of CSRC on the governance of listed companies.
(1) In respect of shareholders and general meetings
During the reporting period, the convening, holding, and voting procedures of shareholder meetings werestandardized and in strict compliance with provisions and requirements of the Rules of Procedure of the GeneralMeetings of Shareholders and the Articles of Association. All shareholders were treated equally and were able tofully exercise their rights. The general shareholder meetings during the reporting period were convened by theBoard of Directors and lawyers were invited to the site for witnessing.
(2) In respect of shareholders and the Company
The Company’s controlling shareholder strictly regulated its behaviors in accordance with the Code of CorporateGovernance for Listed Companies, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, andthe Articles of Association. The controlling shareholder exercised its shareholder rights through the generalmeeting of shareholders, and there were no actions of the controlling shareholder of bypassing the generalmeeting and directly or indirectly interfering with the Company’s operations and decision making.
(3) In respect of the directors and the Board of Directors
The Board of Directors of the Company currently comprises 9 directors, among which 3 are independent directors.The number and composition of the Board of Directors meet requirements of laws and regulations. The Companyconducts the selection of directors in strict accordance with provisions of the Company Law and the Articles ofAssociation, to ensure open, fair, just and independent engagement of directors. All directors are able to carry outwork as per requirements set out in the Rules of Procedure of the Board of Directors and other regulations. Theyattend Board meetings and shareholder meetings, actively participate in relevant knowledge training to familiarizewith and acquire relevant laws and regulations, and earnestly perform their duties as directors of being honest andtrustworthy, diligent and conscientious.
(4) In respect of supervisors and the Board of Supervisors
The Board of Supervisors of the Company currently comprises 3 directors, among which one is employeesupervisor. The Company conducts the selection of supervisors in strict accordance with provisions of theCompany Law and the Articles of Association, and the number and composition of the Board of Supervisors meet
requirements of laws and regulations. All supervisors earnestly perform their duties as per requirements of theRules of Procedure of the Board of Supervisors and other relevant regulations, to supervise the decision-makingprocedures and resolutions of the Board of Directors and the Company’s legal operations and to effectivelyoversee the legality and compliance of directors, managers and other senior executives of the Company in theirduty performance.
(5) In respect of performance appraisal and incentive restriction mechanism
The Company’s appointment of senior management is open and transparent and in compliance with relevant lawsand regulations. The Company has established a sound performance appraisal mechanism under which theremuneration of the senior management is linked to the Company’s business performance indicators.
(6) In respect of investor relations (IR) management
The Sectary of the Board of Directors of the Company is responsible for IR management while the Office of theBoard of Directors carries out daily affairs of IR management. In order to further strengthen and improve IRmanagement, the Company has formulated the Investor Relations Management System, the Investor CompliantManagement System, and the Administrative Measures for the Reception of Institutional Investors. IR activitiesmust be conducted in strict accordance with relevant provisions and it is strictly forbidden to disclose anyundisclosed information of the Company. Personnel from the Office of the Board of Directors are dedicated toanswering calls of investors, replying their emails, and responding to questions raised by investors on relevantinteraction platforms, to maintain smooth and sound communication with investors. Response of investors hasbeen positive.The Office of the Board of Directors is responsible for the reception of investors and archival of relevantdocuments. Dedicated personnel are arranged to well receive investor visits. The Company properly arrangesindividual investors, analysts and fund managers who come to the Company for onsite research to visit the sites ofthe Company, discuss with them and sign the Letter of Commitment with them for information confidentiality.Records are well documented for each visit and the IR activity form is submitted to Shenzhen Stock Exchangewithin two trading days. On the basis of not violating relevant provisions of CSRC, Shenzhen Stock Exchange andthe Company’s Information Disclosure Management System, situations of the Company are presented in anobjective, true, accurate and complete manner. The Company attaches great importance to IR management in itsdaily work by actively communicating with investors, understanding relevant situations, and listing to relevantsuggestions. Attention is also paid to the cultivation of healthy long-term investors.The Company will continue the good work in information disclosure and IR management, and ensure true,accurate, timely and complete information disclosure and smooth, convenient, fair and effective communicationchannels with investors.
(7) In respect of information disclosure and transparency
The Company has set up the Office of Board of Directors which is equipped with professionals, and disclosesinformation of the Company in a true, accurate, timely and complete manner in strict compliance with relevantlaws and regulations as well as systems of the Company including the Information Disclosure ManagementSystem, the Management System for External Information Users, the Accountability System for Significant Errorsin Information Disclosure of Annual Reports, and the Internal Reporting System for Significant Events. Thisensures that all shareholders of the Company could obtain information with equal opportunities.
(8) In respect of stakeholders
The Company fully respects and safeguards the legitimate rights and interests of relevant stakeholders andactively cooperates with them. In order to coordinate and balance the interests of shareholders, employees, societyand other parties, the Company strengthens communication and exchange with all parties, to jointly promote itssustainable and healthy development.
2. Corporate governance regulations established or revised by the Company during the reporting periodDuring the reporting period, the Company revised the Rules of Procedure of the Board of Directors, the Rules ofProcedure of the General Meeting of Shareholders, the Rules of Procedure of the Board of Supervisors, theWorking Rules of the Audit Committee, the Working Rules of the Nomination Committee, the Working Rules of theRemuneration and Appraisal Committee, the Working Rules of the Strategy Committee, the Working Rules of theGeneral Manager, and the Articles of Association based on its operating conditions and relevant provisions. Thesehave timely improved its governance and internal control management system.
Whether there are significant differences between the Company’s actual status of corporate governance and laws, administrativeregulations and CSRC normative documents on the governance of listed companies
□ Yes √ No
There were no significant differences between the Company’s actual conditions and laws, administrative regulations and CSRCnormative documents on listed company governance.
II. The Company’s Independence from Its Controlling Shareholders in terms of Business,Personnel, Finance, Organization, Business, etc.The Company operates in strict compliance with the Company Law and the Articles of Association. It isindependent from the controlling shareholder in terms of business, personnel, assets, institution, finance, etc. andhas independent and complete business systems and independent management capabilities.
1. In respect of business: The Company has independent and complete supply, R&D, production and sales systemsas well as the ability to operate independently in the market. It can independently conduct business, accountingand decision making and independently assume responsibilities and risks, without any reliance on the controllingshareholder or any other related party.
2. In respect of personnel: The Company has formed a complete system in terms of labor, personnel and salarymanagement and has established an independent HR department to manage labor, personnel and salaryindependently of the controlling shareholder. It owns an independent workforce while its directors, supervisorsand senior management have been created legally in accordance with the Company Law, the Articles ofAssociation and other relevant laws and regulations. All senior managers work in the Company and collect salarywithout holding any position other than the director or supervisor in the controlling shareholder/its subsidiaries.
3. In respect of asset: The property relationship between the Company and the controlling shareholder is clear. TheCompany possesses independent legal person assets as well as production systems, auxiliary production systemsand supporting facilities relating to production and operation. In addition, it independently owns lands, plants,equipment and machinery relating to production and operation. The Company completely controls all assets.
There is no situation in which assets and funds are appropriated by the controlling shareholder, thereby impairinginterests of the Company.
4. In respect of institution: The Company has set up a sound organizational system aligned to its own productionand operation needs. It functions independently and well without any subordination relationship with functionaldepartments of the controlling shareholder.
5. In respect of finance: The Company has set up an independent financial and accounting department equippedwith full-time financial personnel. It has also established an independent accounting system and a standardizedfinancial management system and is able to make decisions relating to financial matters independently. TheCompany opens independent bank accounts and files for tax returns and performs taxation obligationsindependently. There is no shared bank account or mixed tax payment with the controlling shareholder.III. Horizontal Competition
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meetings Held during the ReportingPeriod
1. Shareholder meetings during the reporting period
| Session of meeting | Type | Ratio of investor participation | Date of convening | Date of disclosure | Resolutions of the meeting |
| 2021 First Extraordinary General Meeting | Extraordinary general meeting of shareholders | 53.68% | January 21, 2021 | January 22, 2021 | Deliberated and approved: 1. Proposal on Election of Non-Independent Directors of the Fifth Session of the Board of Directors; 2. Proposal on Election of Independent Directors of the Fifth Session of the Board of Directors; 3. Proposal on Election of Shareholder Representative Supervisors of the Fifth Session of the Board of Supervisors; 4. Proposal on Changing the Business Scope and Amending the Articles of Association of the Company |
| 2021 Second Extraordinary General Meeting | Extraordinary general meeting of shareholders | 54.85% | January 29, 2021 | January 30, 2021 | Deliberated and passed: 1. Proposal on Building a New 400,000-ton Household |
| Paper Project; 2. Proposal on Use of Self-owned Idle Funds for Reverse Repo of Treasury Bonds in 2021; | |||||
| 2021 Third Extraordinary General Meeting | Extraordinary general meeting of shareholders | 54.72% | April 07, 2021 | April 08, 2021 | Deliberated and approved: 1. Proposal on By-election of Non-Independent Directors of the Fifth Session of the Board of Directors; 2. Proposal on Amending the Articles of Association of the Company |
| 2020 Annual General Meeting of Shareholders | Annual general meeting | 54.78% | May 19, 2021 | May 20, 2021 | Deliberated and approved: 1. Proposal on the 2020 Annual Report and Its Summary; 2. Proposal on the 2020 Work Report of the Board of Directors; 3. Proposal on the 2020 Work Report of the Board of Supervisor; 4. Proposal on the 2020 Final Financial Accounts; 5. Proposal on 2020 Profit Distribution Plan; 6. Proposal on the Remuneration of Directors in 2020; 7. Proposal on the Remuneration of Supervisor in 2020; 8. Proposal on Changing the Business Premise and Amending the Articles of Association of the Company |
| 2021 Fourth Extraordinary General Meeting | Extraordinary general meeting of shareholders | 57.22% | June 07, 2021 | June 08, 2021 | Deliberated and approved: 1. Phase III Employee Stock Ownership Plan (Draft) and Its Summary; 2. Administrative Measures for the Phase III Employee Stock Ownership Plan; 3. Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of |
| Directors to Handle Matters Relating to the Phase III Employee Stock Ownership Plan; 4. Proposal on Continued Engagement of the Accounting Firm; 5. Proposal on Amending the Articles of Association of the Company; 6. Proposal on Amending the Rules of Procedure of the General Meeting of Shareholders; 7. Proposal on Amending the Rules of Procedure of the Board of Directors; 8. Proposal on Amending the Rules of Procedure of the Board of Supervisors; 9. Proposal on the Repurchase and Deregistration of Partial Restricted Stocks Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan | |||||
| 2021 Fifth Extraordinary General Meeting | Extraordinary general meeting of shareholders | 52.87% | November 17, 2021 | November 18, 2021 | Deliberated and approved: 1. Proposal on By-election of Non-Independent Directors of the Fifth Session of the Board of Directors |
| 2021 Sixth Extraordinary General Meeting | Extraordinary general meeting of shareholders | 53.86% | December 20, 2021 | December 21, 2021 | Deliberated and approved: 1. Proposal on the Repurchase and Deregistration of Partial Reserved Restricted Stocks under the 2018 Stock Option and Restricted Stock Incentive Plan; 2. Proposal on Amending the Articles of Association of the Company; 3. Proposal on the Company’s Application for Credit Lines from Banks in 2022; 4. Proposal on the Company’s Provision of |
Guarantee to Subsidiaries in2022; 5. Proposal on Use ofSelf-owned Idle Funds forReverse Repo of TreasuryBonds in 2022; 6. Proposalon the Company’s Provisionof Credit Guarantee toDealers in 2022; 7. Proposalon By-election ofShareholder RepresentativeSupervisors of the FifthSession of the Board ofSupervisors
2. Extraordinary general meetings of shareholders proposed to be convened by preferred shareholderswhose voting rights were resumed
□ Applicable √ Not applicable
V. Particulars of Directors, Supervisors and Senior Management
1. Basic information
| Name | Position | Position status | Gender | Age | Start date of term of office | End date of term of office | Number of shares held at the beginning of the period | Increase of shares during the period | Decrease of shares during the period | Other changes (shares) | Number of shares held at the end of the period | Reason for change |
| Deng Yingzhong | Director | Incumbent | Male | 71 | December 12, 2008 | January 20, 2024 | 6,752,811 | 6,752,811 | ||||
| Liu Peng | Chairman | Incumbent | Male | 42 | April 12, 2021 | January 20, 2024 | 61,300 | 61,300 | Share increase | |||
| Liu Peng | President | Incumbent | Male | 42 | March 22, 2021 | January 20, 2024 | ||||||
| Deng Guanbiao | Vice Chairman | Incumbent | Male | 44 | December 12, 2011 | January 20, 2024 | 4,957,473 | 4,957,473 | ||||
| Deng Guanjie | Vice Chairman | Incumbent | Male | 38 | June 22, 2020 | January 20, 2024 | 1,200,974 | 1,200,974 |
| Zhang Yang | Director | Incumbent | Male | 45 | November 17, 2021 | January 20, 2024 | 210,000 | |||||
| Zhang Yang | Vice President | Incumbent | Male | 45 | July 12, 2021 | January 20, 2024 | ||||||
| He Haidi | Independent Director | Incumbent | Male | 54 | March 10, 2017 | March 09, 2023 | ||||||
| He Guoquan | Independent Director | Incumbent | Male | 46 | January 21, 2021 | January 20, 2024 | ||||||
| Liu Die | Independent Director | Incumbent | Male | 44 | January 21, 2021 | January 20, 2024 | ||||||
| Yue Yong | Vice President | Incumbent | Male | 56 | July 09, 2019 | January 20, 2024 | 10,537,741 | 872,500 | 9,665,241 | Share decrease | ||
| Li Zhaojin | Vice President | Incumbent | Male | 59 | April 12, 2021 | January 20, 2024 | 10,800 | 10,800 | Share increase | |||
| Deng Wenxi | Vice President | Incumbent | Female | 48 | April 27, 2021 | January 20, 2024 | 21,100 | 21,100 | Share increase | |||
| Zhao Ming | Vice President | Incumbent | Male | 44 | November 30, 2021 | January 20, 2024 | 35,000 | |||||
| Lin Tiande | Vice President | Incumbent | Male | 42 | November 30, 2021 | January 20, 2024 | 317,521 | |||||
| Zhang Haijun | Board Secretary, Vice President | Incumbent | Male | 48 | August 23, 2021 | January 20, 2024 | ||||||
| Dong Ye | Chief Financial Officer | Incumbent | Male | 58 | December 12, 2011 | January 20, 2024 | 228,725 | 15,000 | 243,725 | Exercise of stock operations | ||
| Chen Haiyuan | Chairman of the Board of Supervisors | Incumbent | Male | 68 | September 22, 2015 | January 20, 2024 | 16,900 | 16,900 | Share increase | |||
| Liang Yongliang | Supervisor | Incumbent | Male | 43 | December 12, 2011 | January 20, 2024 | ||||||
| Zhang Gao | Supervisor | Incumbent | Male | 48 | December 20, | January 20, 2024 | 72,000 |
| 2021 | ||||||||||||
| Zeng Yi | Director | Resigned | Female | 46 | January 31, 2018 | January 21, 2021 | ||||||
| Huang Hongyan | Independent Director | Resigned | Male | 52 | January 06, 2015 | January 21, 2021 | ||||||
| Ge Guangrui | Independent Director | Resigned | Female | 55 | January 06, 2015 | January 21, 2021 | ||||||
| Yue Yong | Director | Resigned | Male | 56 | January 21, 2021 | March 18, 2021 | ||||||
| Deng Guanbiao | President | Resigned | Male | 44 | January 06, 2015 | March 09, 2021 | ||||||
| Deng Yingzhong | Chairman | Resigned | Male | 71 | December 12, 2008 | April 09, 2021 | ||||||
| Dai Zhenji | Director | Resigned | Male | 56 | June 15, 2020 | April 28, 2021 | 1,670,000 | 142,500 | -1,100,000 | 427,500 | Cancellation of restricted shares due to resignation; exercise of stock options | |
| Dai Zhenji | Joint President | Resigned | Male | 56 | June 22, 2020 | April 28, 2021 | ||||||
| Li Youquan | Supervisor | Resigned | Male | 43 | January 31, 2018 | July 12, 2021 | 62,280 | 3,000 | 65,280 | Share increase | ||
| Zhou Qichao | Vice President | Resigned | Male | 42 | June 30, 2017 | July 29, 2021 | 498,672 | 124,600 | 374,072 | Share decrease | ||
| Zhou Qichao | Board Secretary | Resigned | Male | 42 | August 16, 2017 | July 29, 2021 | ||||||
| Ye Longfang | Vice President | Resigned | Male | 46 | July 09, 2019 | October 27, 2021 | 150,000 | 150,000 | ||||
| Liu Jinfeng | Director | Resigned | Male | 46 | September 11, 2015 | March 23, 2022 | 2,410,550 | 601,200 | 1,809,350 | Share decrease | ||
| Liu Jinfeng | Vice President | Resigned | Male | 46 | January 31, 2018 | March 23, 2022 | ||||||
| Total | -- | -- | -- | -- | -- | -- | 28,469,226 | 113,100 | 1,740,800 | -1,085,000 | 26,391,047 | -- |
Whether there is any resignation of directors and supervisors or dismissal of senior management within their term of office during the
reporting period
√ Yes □ No
1. On March 18, 2021, Mr. Yue Yong resigned from the position of Director; after resignation, he still serves as theVice President of the Company.
2. On March 19, 2021, Mr. Deng Guanbiao resigned from the position of President; after resignation, he stillserves as the Vice Chairman and member of the Strategy Committee of the Company.
3. On April 9, 2021, Mr. Deng Yingzhong resigned from the position of Chairman; after resignation, he still servesas the Director and Chairman of the Strategy Committee of the Company.
4. On April 28, 2021, Mr. Dai Zhenji resigned from the position of Director and Joint President; after resignation,he no longer holds any position in the Company.
5. On July 12, 2021, Mr. Li Youquan resigned from the position of Supervisor; after resignation, he no longerholds any position in the Company.
6. On July 29, 2021, Mr. Zhou Qichao resigned from the position of Board Secretary and Vice President; afterresignation, he no longer holds any position in the Company.
7. On October 27, 2021, Mr. Ye Longfang resigned from the position of Vice President; after resignation, he nolonger holds any position in the Company.
8. On March 23, 2022, Mr. Liu Jinfeng resigned from the position of Director and Vice President; after resignation,he still holds other positions in the Company.Changes in directors, supervisors and senior management of the Company
√ Applicable □ Not applicable
| Name | Position | Type | Date | Reason |
| Zeng Yi | Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
| Huang Hongyan | Independent Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
| Ge Guangrui | Independent Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
| He Guoquan | Independent Director | Elected | January 21, 2021 | Elected upon the change of board of directors |
| Liu Die | Independent Director | Elected | January 21, 2021 | Elected upon the change of board of directors |
| Yue Yong | Director | Resigned | March 18, 2021 | Voluntary resign |
| Deng Guanbiao | President | Dismissed | March 09, 2021 | Voluntary resign |
| Liu Peng | President | Appointed | March 22, 2021 | Appointed by the board of directors |
| Deng Yingzhong | Chairman | Resigned | April 09, 2021 | Voluntary resign |
| Liu Peng | Chairman | Elected | April 12, 2021 | Elected by the board of directors |
| Li Zhaojin | Vice President | Appointed | April 12, 2021 | Appointed by the board of directors |
| Deng Wenxi | Vice President | Appointed | April 27, 2021 | Appointed by the board of directors |
| Dai Zhenji | Director, Joint President | Resigned | April 28, 2021 | Voluntary resign |
| Li Youquan | Supervisor | Resigned | July 12, 2021 | Voluntary resign |
| Zhang Yang | Vice President | Appointed | July 12, 2021 | Appointed by the board of directors |
| Zhou Qichao | Board Secretary, Vice President | Dismissed | July 29, 2021 | Voluntary resign |
| Zhang Haijun | Board Secretary, Vice President | Appointed | August 23, 2021 | Appointed by the board of directors |
| Ye Longfang | Vice President | Dismissed | October 27, 2021 | Voluntary resign |
| Zhang Yang | Director | Elected | November 17, 2021 | Elected by the general meeting of shareholders |
| Lin Tiande | Vice President | Appointed | November 30, 2021 | Appointed by the board of directors |
| Zhao Ming | Vice President | Appointed | November 30, 2021 | Appointed by the board of directors |
| Zhang Gao | Supervisor | Elected | December 20, 2021 | Elected by the general meeting of shareholders |
| Liu Jinfeng | Director, Vice President | Resigned | March 23, 2022 | Voluntary resign |
2. Main working experience
Professional background, main working experience and main current responsibilities of the Company’s in-servicedirectors, supervisors and senior managementMr. Deng Yingzhong, male and born in 1951, is the founder of the Company. Mr. Deng started to engage in thepaper industry in 1979 and thereby has more than 40 years of industry experience. He served as the Chairman ofZhongshan Zhongshun Paper Manufacturing Co., Ltd. from 1992 to 1999, the Chairman and Legal Representativeof that company from 1999 to 2005, and a director of that company from 2005 and 2008. He was the Chairman ofthe Company from 2008 to April 2021 and is currently a director and Chairman of the Strategy Committee of theCompany. He has been rewarded titles like “National Township Entrepreneur”, “China Excellent PrivateEntrepreneurs of Technology Firms”, “Excellent Private Entrepreneur of Guangdong Province”, “ExcellentManager of Quality Work of Guangdong Province”, “Excellent Entrepreneur of Zhongshan City”, etc.Liu Peng, male, has a bachelor’s degree and is a CPC member and of Chinese nationality. He successively servedas the President of Industrial Bank Jiangmen Branch and Zhongshan Branch. He acts as the Chairman of theCompany from March 2021 and the President of the Company from April 2021.Deng Guanbiao, male and born in 1978, is of Chinese nationality and has the permanent residency in Republic ofGambia and the permanent resident status in Macao Special Administrative Region. He holds a bachelor’s degree.
Starting to work in Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in 1999, he was once a director andDeputy General Manager of that company and a director and General Manager of the Company. He served as theGeneral Manager of the Company from 2015 to March 2021 and has been the Vice Chairman of the Companysince 2011.Deng Guanjie, male and born in 1984, studied at Oxford Brookes University in England from 2004 to 2007 andobtained a bachelor’s degree. He acted as the Assistant to the Chairman of Zhongshan Zhongshun PaperManufacturing Co., Ltd. from 2005 to 2007 and the Assistant to the Chairman of the Company from 2008 toFebruary 2011. Afterwards, he was the Assistant to the Chairman and the HR Director from March 2011 toJanuary 2012 and the Assistant to the Chairman of the Company from February 2012 to March 2013. He has beena director of the Company ever since December 2011 and served as the Vice President of the Company from April2013 to June 2006 and as the Vice Chairman of the Company from June 2020.Zhang Yang, male and born in 1977, is of Chinese nationality and has no permanent residency abroad. He workedas the Sales Manager of Sichuan C&S from 2006 to September 2009 and successively as the Sales Manager,General Sales Manager and General Trade Manager of Chengdu C&S from October 2007 to June 2014.Afterwards, he served as the Deputy General Manager of the Company from January 2015 to January 2018 and asa director of the Company from December 2015 to January 2018. From July 2014 to June 2021, he was theGeneral Manager of the Southwest Region of the Company. He acts as the Vice President of the Company fromJuly 2021 and the director of the Company from November 2021.He Haidi, male and born in September 1968, is of Chinese nationality and has no permanent residency abroad. Hegraduated from the Library Science of Wuhan University and was awarded a bachelor’s degree in arts, and thenreceived a master’s degree in management from Wuhan University in 2006. Mr. He possesses the technical title ofassociate researcher and is a CPC member. Currently, he works in the University of Electronic Science andTechnology of China, Zhongshan Institute, engaging in the teaching and research of information consulting,services, analysis, retrieval, etc. He has presided over and been involved in a dozen of scientific research projectsat the provincial level of Guangdong Province and the municipal level of Zhongshan City, and has published morethan twenty academic papers in major core journals of the professional field. He has been hired as an expert forthe Review Committee of Medium-Grade Professional Title for Book Information of Zhongshan City and areview expert for government procurements of Zhongshan City. He also part-times in Zhongshan InformationResearch Institute and provides information consulting, information analysis, technology novelty search,development and support for IPR and technological innovation projects, and other services to enterprises. He hasbeen an independent director of the Company since March 2017.He Guoquan, male and born in 1976, is of Chinese nationality and has no permanent residency abroad. He has abachelor’s degree and is a senior certified public accountant in China and Australia, an international certifiedinternal auditor, and national accounting leading talent as ascertained by the Ministry of Finance. He once servedas a non-independent director of Singapore-listed Debao Property Group and resigned in 2018. From 1997 toJanuary 2022, he worked as a partner in GP Certified Public Accountants (Limited Liability Partnership). InJanuary 2022, he joined the Guangdong Sinong Certified Public Accountants LLP and has been working thereever since. He has been as an independent director of the Company since January 2021.
Liu Die, male and born in 1978, is of Chinese nationality and has no permanent residency abroad. He graduatedfrom South-Central University for Nationalities in 2005 with a master’s degree in law theory. He passed thenational judicial examination and obtained the lawyer’s qualification certificate in 2004. From 2007 to 2018, hesuccessively served as a lawyer in Guangdong Yashang Law Firm, Guangdong Hengyun Law Firm, andGuangdong Xiangshan Law Firm. Currently, he is the lead lawyer in Guangdong Liu Zhi Jun Law Firm. He actsas an independent director of the Company since January 2021.Yue Yong, male and born in 1966, is of Chinese nationality. He joined Zhongshan Zhongshun PaperManufacturing Co., Ltd. in 1993 and successively served as the Production Manager of Zhongshan Zhongshunand the General Manager of C&S (Sichuan) Paper Co., Ltd. He was a director and Deputy General Manager ofZhongshan Zhongshun between 2005 and 2008. Afterwards, he became a director and Vice President of theCompany from 2009 to 2015. He has been the Procurement President since 2015 and the Vice President of theCompany since July 2019.Li Zhaojin, male and born in April 1962, is from Taiwan China and has a bachelor’s degree. He joined the GoldHongye Paper Group in 2005 and successively served as the Production Manager, Papermaking (Pre-production)General Manager, Manufacturing General Manager, etc. Mr. Li started to work for the Company since November2019 and acts as the Vice President of the Company since April 2021.Deng Wenxi, female and born in 1974, graduated from the University of Hong Kong with a master’s degree. Sheworked as the General Branding Manager of Hengan International Group from April 2009 to May 2018. FromJune 2018 to December 2020, she served successively as the General Manager of the Marketing Center ofDongguan DeRucci Bedding Co., Ltd. and CEO of Guangdong DD-Generc, an entity invested by DeRucci’ssubordinate investment platform. She has been the Vice President of the Company from April 2021.Zhao Ming, male and born in 1978, is of Chinese nationality and has a college degree. From 2005 to 2019, hesuccessively worked in Hengan Group, Mengniu Dairy, Hulling Group, and Taison Group. From September 2019to October 2021, he served as the General Manager of the North China Region of the Company. He has been theVice President of the Company from November 2021.Lin Tiande, male and born in 1980, is of Chinese nationality and has a college degree. Mr. Lin joined theCompany in March 2003 and successively held positions of Director of the Engineering Department, ProjectManager, General Manager of Jiangmen C&S, General Manager of Zhongshan C&S, Deputy General ProductionManager, Production Director, and General Production Manager. He was the General Manager of the TechnologyCenter from March 2020 and October 2021. He has been the Vice President of the Company from November2021.Zhang Haijun, male, was born in 1974 and has a bachelor’s degree. From 1997 to 2001, he was engaged infinancial work in Jiaozuo Coal Group. Later, he joined Zhongshan Zhongshun Paper Manufacturing Co., Ltd.,first responsible for the financial and auditing work in 2004 and 2005 and then as the Manger of the InvestmentManagement Department from 2006 to November 2008. He acted as the Board Secretary of the Company fromDecember 2008 to December 2011 and then as the Vice President and Board Secretary from December 2011 toAugust 2017. From 2012 to 2018, he concurrently served as the independent director of Guangdong FuxinTechnology Co., Ltd. He has been the Vice President and Board Secretary of the Company since August 2021.
Dong Ye, male and born in 1964, is of Chinese nationality and has no permanent residency abroad. He has acollege degree and is an assistant accountant. He joined Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in2006 and successively served as its finance supervisor, Finance Manager, and Deputy Finance Director. He is theperson responsible for the accounting department of the Company, and acted as a director of the Companybetween 2011 and 2014 and became the Chief Financial Officer of the Company since 2011.Chen Haiyuan, male, was born in 1954. He served as the party branch secretary and director of the villagecommittee of Shenglong Village, Tanbei Town, Zhongshan City between 1991 and 1999 and the village’s partybranch secretary between 1999 and 2005. He was the Deputy Director and Assistant to Director of the DongshengTownship Water Authority from 2005 to 2014, and retired in July 2014. Afterwards, he worked as the Company’ssupervision specialist since March 2015, a supervisor since April 2015 and the Chairman of the Board ofSupervisors since September 2015.Liang Yongliang, male and born in 1979, is of Chinese nationality and has no permanent residency abroad. Mr.Liang has a college degree. He joined Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in 2002 andsuccessively served as the Assistant to Finance President of Zhongshan Zhongshun and the General Manager ofthe Investment Management Department and head of the Audit Department of C&S Paper. He started to serve as asupervisor of the Company since 2011.Zhao Gao, male and born in 1974, is of Chinese nationality and has a bachelor’s degree. He worked in JiangluMachinery Factory from July 1997 to May 2005. Afterwards, he joined Zhongshan Zhongshun PaperManufacturing Co., Ltd. and served as an engineer in the project department from May 2005 to September 2006.From September 2006 to October 2010, he was the Engineering Department Manager and ProcurementDepartment Manager of Zhejiang C&S. Since October 2010, he has been serving in the Company as theEquipment Manager of the Engineering Department, Vice President of Equipment and Engineering Director of theTechnology Center in succession. He has been a supervisor of the Company since December 2021.Positions in shareholder entities
√ Applicable □ Not applicable
| Name | Name of shareholder entity | Position held in shareholder entity | Start date of term of office | End date of term of office | Whether receiving remuneration and allowance from shareholder entity |
| Deng Yingzhong | Guangdong Zhongshun Paper Group Co., Ltd. | Legal representative and executive director | May 28, 1999 | No | |
| Deng Yingzhong | Chung Shun Co. | Legal representative | June 01, 1996 | No | |
| Deng Guanbiao | Guangdong Zhongshun Paper Group Co., Ltd. | Supervisor | May 28, 1999 | No | |
| Description on position held in | None | ||||
shareholderentity
Positions in other entities
√ Applicable □ Not applicable
| Name | Name of other entity | Position held in other entity | Start date of term of office | End date of term of office | Whether receiving remuneration and allowance from other entity |
| Deng Yingzhong | Shenzhen Zhongshun Caizhi Investment Co., Ltd. | General Manager | No | ||
| Deng Yingzhong | Bama Zhongshun Health Products Co., Ltd. | Director | No | ||
| Deng Yingzhong | Guangdong Zhongshun Paper Group Co., Ltd. | Executive Director | No | ||
| Deng Guanbiao | Shenzhen Zhongshun Caizhi Investment Co., Ltd. | Supervisor | No | ||
| Deng Guanbiao | Shenzhen Jinju Investment Co., Ltd. | Director | No | ||
| Deng Guanbiao | Zhongshan Zhongshun Caizhi Trading Co., Ltd. | Supervisor | No | ||
| Deng Guanbiao | Guangdong Zhongshun Paper Group Co., Ltd. | Supervisor | No | ||
| Deng Guanbiao | Household Paper and Paperboard Subcommittee of the National Paper Industry Standardization Technical Committee | Member | No | ||
| Deng Guanjie | Shenzhen Jinju Investment Co., Ltd. | Supervisor | No | ||
| Deng Guanjie | Zhongshan Zhongshun Caizhi Trading Co., Ltd. | Manager and Executive Director | No | ||
| Deng Guanjie | Shenzhen Zhongshun Caizhi Investment Co., Ltd. | Executive Director | No | ||
| Liu Peng | China National Household Paper Industry Association | Deputy Director | No | ||
| He Haidi | University of Electronic Science and Technology of China, Zhongshan Institute | Associate Researcher | Yes | ||
| He Guoquan | Guangdong Sinong Certified Public Accountants LLP | Partner | Yes | ||
| Liu Die | Guangdong Liu Zhi Jun Law Firm | Lead Lawyer | Yes |
| Zhang Haijun | Zhongshan Jufengbao Trading Co., Ltd. | Manager, Executive Director and Legal Representative | Yes | ||
| Description on position held in other entity | None | ||||
Penalties by regulatory authorities on the Company’s directors, supervisors and senior management both incumbent and resignedduring the reporting period in the last three years
□ Applicable √ Not applicable
3. Remuneration of directors, supervisors and senior management
Procedures and basis for determining the remuneration of directors, supervisors and senior management and actual payment
1. Procedure for determining the remuneration of directors, supervisors and senior management:
Remunerations of directors and senior management are determined by the Remuneration and Review Committeeunder the Board of Directors. Wherein, remunerations of senior management are executed after being approved bythe Board of Directors, while those of directors should be first deliberated and approved by the Board of Directorsand then submitted to the general meeting of shareholders for approval. Remunerations of supervisors should befirst deliberated and approved by the Board of Supervisors and then submitted to the general meeting ofshareholders for approval.
2. Basis for determining the remuneration of directors, supervisors and senior management:
Remunerations of directors, supervisors and senior management are determined based on the Company’sRemuneration Management System for Directors, Supervisors and Senior Management (April 2019) as well astheir performance appraisal results and the operational results of the Company, with reference to the remunerationlevel of the industry.
3. Actual payment of remuneration to directors, supervisors and senior managementRemuneration of the Company’s incumbent non-independent directors, supervisors and senior managementcomprises two parts of fixed salary and annual performance salary. Wherein, the fixed salary has been distributedmonthly based on performance appraisal results; annual performance salary will be distributed after the annualperformance appraisal of the aforementioned personnel upon the end of the business year. Independent directorsreceive a fixed annual salary from the Company.Remuneration of directors, supervisors and senior management of the Company during the reporting period
Unit: RMB10,000
| Name | Position | Gender | Age | Position status | Total remuneration before tax received from the Company | Whether receiving remuneration from related parties of the |
| Company | ||||||
| Deng Yingzhong | Director | Male | 71 | Incumbent | 501.64 | No |
| Liu Peng | Chairman, President | Male | 42 | Incumbent | 608.17 | No |
| Deng Guanbiao | Vice Chairman | Male | 44 | Incumbent | 102.75 | No |
| Deng Guanjie | Vice Chairman | Male | 38 | Incumbent | 153.63 | No |
| Zhang Yang | Director, Vice President | Male | 45 | Incumbent | 334.53 | No |
| He Haidi | Independent Director | Male | 54 | Incumbent | 10 | No |
| He Guoquan | Independent Director | Male | 48 | Incumbent | 8.8 | No |
| Liu Die | Independent Director | Male | 44 | Incumbent | 8.8 | No |
| Yue Yong | Vice President | Male | 56 | Incumbent | 303.7 | No |
| Li Zhaojin | Vice President | Male | 59 | Incumbent | 242.18 | No |
| Deng Wenxi | Vice President | Female | 48 | Incumbent | 161.56 | No |
| Zhao Ming | Vice President | Male | 44 | Incumbent | 164.17 | No |
| Lin Tiande | Vice President | Male | 42 | Incumbent | 103.75 | No |
| Zhang Haijun | Board Secretary | Male | 48 | Incumbent | 79.53 | No |
| Dong Ye | Chief Financial Officer | Male | 58 | Incumbent | 103.7 | No |
| Chen Haiyuan | Chairman of the Board of Supervisors | Male | 68 | Incumbent | 5.75 | No |
| Liang Yongliang | Supervisor | Male | 43 | Incumbent | 40.5 | No |
| Zhang Gao | Supervisor | Male | 48 | Incumbent | 44.39 | No |
| Zeng Yi | Director | Female | 46 | Resigned | 1.5 | No |
| Huang Hongyan | Independent Director | Male | 52 | Resigned | 0.8 | No |
| Ge Guangrui | Independent Director | Female | 55 | Resigned | 0.8 | No |
| Dai Zhenji | Director, Joint President | Male | 56 | Resigned | 136.81 | No |
| Zhou Qichao | Vice President, Secretary of the Board of Directors | Male | 42 | Resigned | 67.46 | No |
| Li Youquan | Supervisor | Male | 43 | Resigned | 14.2 | No |
| Ye Longfang | Vice President | Male | 46 | Resigned | 83.17 | No |
| Liu Jinfeng | Director, Vice President | Male | 46 | Resigned | 410.02 | No |
| Total | -- | -- | -- | -- | 3,692.31 | -- |
VI. Performance of Duties by Directors during the Reporting Period
1. Board meetings during the reporting period
| Session of meeting | Date of convening | Date of disclosure | Resolutions of the meeting |
| 30th Meeting of the Fourth Session of the Board of Directors | January 05, 2021 | January 06, 2021 | Deliberated and approved: 1. Proposal on Election of Non-Independent Directors of the Fifth Session of the Board of Directors; 2. Proposal on Election of Independent Directors of the Fifth Session of the Board of Directors; 3. Proposal of the Company on Share Repurchase; 4. Proposal on Increasing the Business Scope and Amending the Articles of Association of the Company 5. Proposal of the Board of Directors on Convening 2021 First Extraordinary General Meeting |
| 31st Meeting of the Fourth Session of the Board of Directors | January 13, 2021 | January 14, 2021 | Deliberated and passed: 1. Proposal on Building a New 400,000-ton Household Paper Project; 2. Proposal on Use of Self-owned Idle Funds for Reverse Repo of Treasury Bonds in 2021; 3. Proposal of the Board of Directors on Convening 2021 Second Extraordinary General Meeting |
| 1st Meeting of the Fifth Session of the Board of Directors | January 21, 2021 | January 22, 2021 | Deliberated and approved: 1. Proposal on Election of Chairman of the Fifth Session of the Board of Directors; 2. Proposal on Election of Vice Chairman of the Fifth Session of the Board of Directors; 3. Proposal on Election of Members of Special Committees of the Fifth Session of the Board of Directors; 4. Proposal on Appointing the President and Joint President of the Company; 5. Proposal on Appointing the Vice President of the Company; 6. Proposal on Appointing the Sectary to the Board of the Company; 7. Proposal on Appointing the Chief Financial Officer of the Company; 8. Proposal on Appointing the Person in Charge of the Audit Department; 9. Proposal on Appointing the Representative of Securities Affairs |
| Second Meeting of the Fifth Session of the Board of Directors | March 22, 2021 | March 23, 2021 | Deliberated and approved: 1. Proposal on Appointing the President of the Company; 2. Proposal on By-election of Non-Independent Directors of the Fifth Session of the Board of Directors; 3. Proposal on Appointing the Additional Representative of Securities Affairs; 4. Proposal on Amending the Working Rules of the Strategy Committee; 5. Proposal on Amending the |
| Articles of Association of the Company; 6. Proposal of the Board of Directors on Convening 2021 Third Extraordinary General Meeting | |||
| Third Meeting of the Fifth Session of the Board of Directors | April 12, 2021 | April 13, 2021 | Deliberated and approved: 1. Proposal on Election of Chairman of the Fifth Session of the Board of Directors; 2. Proposal on Appointing the Vice President of the Company; 3. Proposal on By-election of Members of the Strategy Committee |
| Fourth Meeting of the Fifth Session of the Board of Directors | April 27, 2021 | April 29, 2021 | Deliberated and approved: 1. Proposal on the 2020 Annual Report and Its Summary; 2. Proposal on the 2020 Work Report of the General Manager; 3. Proposal on the 2020 Work Report of the Board of Directors; 4. Proposal on the 2020 Environmental, Social and Governance (ESG) Report; 5. Proposal on the 2020 Internal Control Assessment Report; 6. Proposal on the 2020 Final Financial Accounts; 7. Proposal on 2020 Profit Distribution Plan; 8. Proposal on the Remuneration of Senior Management in 2020; 9. Proposal on the Remuneration of Directors in 2020; 10. Proposal on Appointing the Vice President of the Company; 11. Proposal on Changing the Business Premise and Amending the Articles of Association of the Company; 12. Proposal of the Board of Directors on Convening 2020 Annual General Meeting; 13. Proposal on the Full Text and Main Body of the First Quarter Report 2021 |
| Fifth Meeting of the Fifth Session of the Board of Directors | May 21, 2021 | May 22, 2021 | Deliberated and approved: 1. Deliberated the Proposal on Adjusting the Price and Cap Amount of the Company’s Share Repurchase; 2. Deliberated the Proposal on Changes to Accounting Policies; 3. Deliberated the Proposal on Appointing the Person in Charge of the Audit Department; 4. Deliberated the Proposal on the Phase III Employee Stock Ownership Plan (Draft) and Its Summary; 5. Deliberated the Administrative Measures for the Phase III Employee Stock Ownership Plan; 6. Deliberated the Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters Relating to the Phase III Employee Stock Ownership Plan; 7. Deliberated the Proposal on Continued Engagement of the Accounting Firm; 8. Deliberated the Proposal on Amending the Articles of Association of the Company; 9. Deliberated the Proposal on |
| Amending the Rules of Procedure of the Board of Directors; 10. Deliberated the Proposal on Amending the Rules of Procedure of the General Meeting of Shareholders; 11. Deliberated the Proposal on Amending the Working Rules of the General Manager; 12. Deliberated the Proposal on Amending the Working Rules of the Audit Committee; 13. Deliberated the Proposal on Amending the Working Rules of the Remuneration and Review Committee; 14. Deliberated the Proposal on Amending the Working Rules of the Nomination Committee; 15. Deliberated the Proposal on Amending the Working Rules of the Strategy Committee; 16. Proposal on Achieving the Unlock Conditions of the Second Unlock Period for Restricted Stocks Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 17. Proposal on Achieving the Exercise Conditions of the Second Exercise Period for Stock Options Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 18. Proposal on the Repurchase and Deregistration of Partial Restricted Stocks Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 19. Proposal on the Deregistration of Partial Stock Options Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 20. Proposal of the Board of Directors on Convening 2021 Fourth Extraordinary General Meeting | |||
| Sixth Meeting of the Fifth Session of the Board of Directors | June 18, 2021 | June 19, 2021 | Deliberated and approved: Proposal on Adjusting the Exercise Price of Stock Options under 2018 Stock Option and Restricted Stock Incentive Plan |
| Seventh Meeting of the Fifth Session of the Board of Directors | July 12, 2021 | July 13, 2021 | Deliberated and approved: Proposal on Appointing the Vice President of the Company |
| Eighth Meeting of the Fifth Session of the Board of Directors | July 29, 2021 | July 30, 2021 | Deliberated and approved: Proposal on Adjusting the Price of the Company’s Share Repurchase |
| Ninth Meeting of the Fifth Session of the Board of Directors | August 23, 2021 | August 24, 2021 | Deliberated and approved: Proposal on Appointing the Vice President and the Secretary to the Board of the Company |
| Tenth Meeting of the Fifth | August 30, 2021 | August 31, 2021 | Deliberated and approved: Proposal on the Company’s |
| Session of the Board of Directors | 2021 Semi-annual Report and Its Summary | ||
| Eleventh Meeting of the Fifth Session of the Board of Directors | October 27, 2021 | October 28, 2021 | Deliberated and approved: 1. Proposal on the Company’s Third Quarter Report 2021 and Its Summary; 2. Proposal on By-election of Non-Independent Directors of the Fifth Session of the Board of Directors; 3. Proposal on Appointing the Representative of Securities Affairs. 4. Proposal of the Board of Directors on Convening 2021 Fifth Extraordinary General Meeting |
| Twelfth Meeting of the Fifth Session of the Board of Directors | November 30, 2021 | December 01, 2021 | Deliberated and approved: 1. Proposal on By-election of Members of the Audit Committee; 2. Proposal on Terminating the Phase III Employee Stock Ownership Plan; 3. Proposal on Appointing the Vice President of the Company; 4. Proposal on Achieving the Unlock Conditions of the Second Unlock Period for Reserved Restricted Stocks under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 5. Proposal on Achieving the Exercise Conditions of the Second Exercise Period for Reserved Stock Options under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 6. Proposal on the Repurchase and Deregistration of Partial Reserved Restricted Stocks under the 2018 Stock Option and Restricted Stock Incentive Plan; 7. Proposal on the Deregistration of Partial Reserved Stock Options under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 8. Proposal on Amending the Articles of Association of the Company; 9. Proposal on the Company’s Application for Credit Lines from Banks in 2022; 10. Proposal on the Company’s Provision of Guarantee to Subsidiaries in 2022; 11. Proposal on Carrying Out Derivative Trading in 2022 12. Proposal on Use of Self-owned Idle Funds to Purchase Wealth Management Products in 2022; 13. Proposal on Use of Self-owned Idle Funds for Reverse Repo of Treasury Bonds in 2022; 14. Proposal on the Company’s Provision of Credit Guarantee to Dealers in 2022; 15. Proposal on Routine Related Party Transactions; 16. Proposal of the Board of Directors on Convening 2021 Sixth Extraordinary General Meeting |
2. Directors’ attendance to Board meetings and general meetings of shareholders
| Directors’ attendance to Board meetings and general meetings of shareholders | |||||||
| Name of director | Number of Board meetings required to attend during the reporting period | Number of Board meetings attended in person | Number of Board meetings attended via communication methods | Number of Board meetings attended by proxy | Number of absence | Any failure in attending in person for two consecutive meetings | Number of general shareholder meetings attended |
| Deng Yingzhong | 14 | 5 | 9 | 0 | 0 | No | 4 |
| Liu Peng | 10 | 5 | 5 | 0 | 0 | No | 4 |
| Deng Guanbiao | 14 | 5 | 9 | 0 | 0 | No | 4 |
| Deng Guanjie | 14 | 5 | 9 | 0 | 0 | No | 7 |
| Zhang Yang | 1 | 1 | 0 | 0 | 0 | No | 1 |
| He Haidi | 14 | 7 | 7 | 0 | 0 | No | 6 |
| He Guoquan | 12 | 4 | 8 | 0 | 0 | No | 6 |
| Liu Die | 12 | 4 | 8 | 0 | 0 | No | 6 |
| Ge Guangrui (resigned) | 2 | 1 | 1 | 0 | 0 | No | 1 |
| Huang Hongyan (resigned) | 2 | 1 | 1 | 0 | 0 | No | 1 |
| Zeng Yi (resigned) | 2 | 0 | 2 | 0 | 0 | No | 0 |
| Dai Zhenji (resigned) | 6 | 4 | 2 | 0 | 0 | No | 2 |
| Yue Yong (resigned) | 3 | 3 | 0 | 0 | 0 | No | 1 |
| Liu Jinfeng (resigned) | 14 | 3 | 11 | 0 | 0 | No | 4 |
Explanation of failure in attending in person for two consecutive meetingsThere were no situations where the Company’s directors did not attend Board meetings in person for two consecutive times duringthe reporting period.
3. Objections by directors to the Company’s relevant matters
Whether directors raised objections to relevant matters of the Company
□ Yes √ No
Directors did not raise objections to relevant matters of the Company during the reporting period.
4. Other descriptions on directors’ performance of duty
Whether opinions from directors were adopted
√ Yes □ No
Description on whether opinions from directors were adoptedDuring the reporting period, all the directors of the Company performed their duties faithfully and diligently instrict accordance with relevant regulations of the China Securities Regulatory Commission and Shenzhen StockExchange as well as relevant provisions of the Articles of Association of the Company. They actively attendedrelevant meetings on time, carefully reviewed various proposals, paid attention to the Company’s production,operation and financial status at all times, and put forward valuable, professional opinions to the Company’sdevelopment strategies and corporate governance improvement. All these have effectively strengthened theCompany’s standardized operation and improved its scientific decision-making level. Moreover, independentdirectors of the Company have presented impartial independent opinions with regard to the Company’s sharerepurchase, equity incentive plan, employee stock ownership plan, annual profit distribution, external guarantee,estimation of routine related-party transactions, etc., which has effectively safeguarded the legitimate rights andinterests of investors especially the small and medium investors.
VII. Particulars of the Special Committees under the Board of Directors during the Reporting Period
| Name of committee | Members | Number of meetings convened | Date of convening | Contents | Important opinions and suggestions raised | Other situations of duty performance | Specifics of objections (if any) |
| Strategy Committee under the Board of Directors | Deng Yingzhong, Deng Guanbiao, Yue Yong, He Haidi | 1 | January 21, 2021 | Deliberated: Matters Concerning the Election of the Chairman of the Strategy Committee of the Fifth Session of the Board of Directors; | The Strategy Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Strategy Committee; the proposal was passed unanimously. | None | None |
| Nomination Committee under the Board of Directors | He Haidi, He Guoquan, Liu Jinfeng | 8 | January 21, 2021 | Deliberated: 1. Proposal on Appointing the President and Joint President of the Company; 2. Proposal on Appointing the Vice President of the Company; 3. Proposal on Appointing the Sectary to the Board of the Company; 4. Proposal on Appointing the Chief Financial Officer of the Company; 5. Matters Concerning the Election of the Chairman of the Nomination Committee of the Fifth Session of the Board of Directors; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposals according to the actual situation of the Company; all proposals were unanimously passed. | None | None |
| March 18, 2021 | Deliberated: Proposal on Appointing the President of the Company; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory | None | None |
| requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | ||||
| April 02, 2021 | Deliberated: Proposal on Appointing the Vice President of the Company; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
| April 16, 2021 | Deliberated: Proposal on Appointing the Vice President of the Company; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
| July 05, 2021 | Deliberated: Proposal on Appointing the Vice President of the Company; | The Nomination Committee carried out work diligently and responsibly in strict | None | None |
| accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | ||||
| August 17, 2021 | Deliberated: Proposal on Appointing the Vice President and the Secretary to the Board of the Company; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
| October 20, 2021 | Deliberated: Proposal on By-election of Non-Independent Directors of the Fifth Session of the Board of Directors; | The Nomination Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
| November 12, 2021 | Deliberated: Proposal on Appointing the Vice | The Nomination Committee carried out | None | None |
| President of the Company; | work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Nomination Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | ||||||
| Remuneration and Review Committee under the Board of Directors | Liu Die, He Haidi, Deng Guanjie | 4 | January 21, 2021 | Deliberated: Matters Concerning the Election of the Chairman of the Remuneration and Review Committee of the Fifth Session of the Board of Directors; | The Remuneration and Review Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Remuneration and Review Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
| April 12, 2021 | Deliberated: 1. Proposal on the Remuneration of Senior Management in 2020; 2. Proposal on the Remuneration of Directors in 2020; | The Remuneration and Review Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Remuneration and Review Committee. The Committee reviewed and fully discussed the proposals according to the actual situation of the Company; all proposals were unanimously passed. | None | None |
| May 18, 2021 | Deliberated: 1. Proposal on Achieving the Unlock Conditions of the Second Unlock Period for Restricted Stocks Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 2. Proposal on Achieving the Exercise Conditions of the Second Exercise Period for Stock Options Awarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; | The Remuneration and Review Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Remuneration and Review Committee. The Committee reviewed and fully discussed the proposals according to the actual situation of the Company; all proposals were unanimously passed. | None | None | |||
| November 26, 2021 | Deliberated: 1. Proposal on Achieving the Unlock Conditions of the Second Unlock Period for Reserved Restricted Stocks under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; 2. Proposal on Achieving the Exercise Conditions of the Second Exercise Period for Reserved Stock Options under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan; | The Remuneration and Review Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Remuneration and Review Committee. The Committee reviewed and fully discussed the proposals according to the actual situation of the Company; all proposals were unanimously passed. | None | None | |||
| Audit Committee under the Board of Directors | He Guoquan, Liu Die, Dai Zhenji (resigned on April 28, 2021), Zhang Yang | 4 | April 23, 2021 | Deliberated: 1. Second-time communication between the governance layer and Mazars Certified Public Accountants (LLP) regarding the audit of the 2020 financial statements; 2. Audit Report of Q1 2021 | The Audit Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Audit Committee. The Committee reviewed and fully discussed the | None | None |
| (by-election on November 30, 2021) | 3. Work Plan for Q3 2021 4. Audit Report on External Guarantees in Q1 2021; Audit Report on External Investments in Q1 2021; Audit Report on the Purchase and Sales of Assets in Q1 2021; Audit Report on Related Party Transactions in Q1 2021; Audit Report on the Appropriation of Funds by Controlling Shareholder and Its Related Parties in Q1 2021 | proposals according to the actual situation of the Company; all proposals were unanimously passed. | ||||
| May 20, 2021 | Deliberated the proposal on engaging Mazars Certified Public Accountants (LLP) as the audit institution for 2021 financial statements | The Audit Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Audit Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None | ||
| October 27, 2021 | Deliberated: 1. Report on main audit items in Q2 and Q3 2021 2. Report on the audit results regarding financial information disclosure of 2021 Semi-annual Report 3. Report on supervision work in Q2 and Q3 2021 4. Report on supervision of bidding in Q2 and Q3 2021 | The Audit Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Audit Committee. The Committee reviewed and fully discussed the proposals according to the actual situation of the Company; all proposals were unanimously passed. | None | None |
| 5. Audit work plan for Q4 2021 | ||||
| November 30, 2021 | Mazars Certified Public Accountants (LLP)’s inclusion of operating income and selling expense as the key matter of this audit | The Audit Committee carried out work diligently and responsibly in strict accordance with relevant regulatory requirements as well as provisions of the Articles of Association and the Working Rules of the Audit Committee. The Committee reviewed and fully discussed the proposal according to the actual situation of the Company; the proposal was unanimously passed. | None | None |
VIII. Work of the Board of Supervisors
Whether the Board of Supervisors discovered risks in supervisory activities during the reporting period
□ Yes √ No
The Board of Supervisors had no objections to supervised events during the reporting period.
IX. Employees of the Company
1. Number, profession composition and education level of employees
| Number of in-service employees of the Parent Company at the end of the reporting period | 1,063 |
| Number of in-service employees of the major subsidiaries at the end of the reporting period | 5,977 |
| Total number of in-service employees at the end of the reporting period | 7,040 |
| Total number of employees receiving remuneration in the reporting period | 7,227 |
| Number of retired employees whose expenses are borne by the Parent Company and its major subsidiaries | 4 |
| Composition of professions | |
| Type of professions | Number of staff in the profession |
| Production staff | 2,565 |
| Sales staff | 3,050 |
| Technical staff | 615 |
| Finance staff | 131 |
| Administrative staff | 679 |
| Total | 7,040 |
| Education level | |
| Type of education level | Number of persons |
| University graduates or above | 698 |
| College graduates | 1,609 |
| High school graduates or below | 4,733 |
| Total | 7,040 |
2. Remuneration policy
The Company has established the following reward and incentive policies:
1. Bonus Package Program for Marketing Team 2021 (including the remuneration program for sales management)
2. Reward Program for Team Breakthroughs of the Marketing Department 2021—Business Team
3. Indicator Competition Program of the Marketing Department 2021—Business Team
4. Reward Program for Production Team 2021
5. Indicator Competition Program of the Production Department 2021
6. Reward Program for Accounting Team 2021
7. Reward Program for Finance Team 2021
8. Reward Program for Supply Chain Team 2021
9. Management System of C&S Paper for Marketing Staff Promotion 2021
10. Procurement Reward Program 2021
3. Training program
Training programs carried out by the Company in 2021 are as follows:
1. 2021 Mentorship Program: Amoeba operation to achieve optimal performance; advanced coaching, downwardmanagement (guidance and empowerment, motivation and training of subordinates) + upward management.
2. 2021 Voyage Program: Plan formulation in 2021 to achieve optimal performance; leadership, downwardmanagement (guidance and empowerment, motivation and training of subordinates) + upward management.
3. 2021 Starter Program: Becoming effective managers, five obstacles to team collaboration, workplacecommunication, seven major QC techniques, organizational planning and execution.
4. 2021 Meet Program: Corporate culture, selling points + display principles of major products, five obstacles toteam collaboration, manager role cognition and growth, establishment of efficient workplace interpersonalrelations, factory internship and factory management knowledge.
5. 2021 Commander Program: Five obstacles to team collaboration, Lead to Excellence workshop,communication essentials (management direction).
6. 2021 Lighthouse Program: 13 online courses + 2 days offline on teaching skills and course development.
4. Labor outsourcing
□ Applicable √ Not applicable
X. Profit Distribution of the Ordinary Shares and Conversion of Capital Reserve to ShareCapital of the Company
Formulation, implementation or adjustment of profit distribution policies of ordinary shares especially the cash dividend plan in thereporting period
√ Applicable □ Not applicable
During the reporting period, the Company strictly implemented the Articles of Association, the DividendManagement Regulations, and the Shareholder Return Plan for the Next Three Years (2020-2022), which specifiedthe Company’s dividend distribution standards, ratio and decision-making procedures. This could guarantee thecontinuity and stability of dividend distribution policies from an institutional perspective and fully protect thelegitimate rights and interests of minority investors.
| Special explanation on cash dividend policy | |
| Whether the policy complies with provisions of the Articles of Association or requirements of the resolutions made on the shareholders’ general meeting: | Yes |
| Whether dividend standards and ratio are definite and clear: | Yes |
| Whether relevant decision-making procedure and mechanism are well-established: | Yes |
| Whether independent directors have performed duties and played their roles properly: | Yes |
| Whether minority shareholders have sufficient opportunities to express opinions and requests, and whether their legitimate rights and interests were sufficiently protected: | Yes |
| Where the cash dividend policy undergoes any adjustment or change, whether the conditions and procedures are compliant and transparent: | Not applicable |
The Company gained profits in the reporting period and the retained profit of the Parent Company for holders of ordinary shares ispositive, but no plan of cash dividend is proposed
□ Applicable √ Not applicable
Profit distribution and conversion of capital reserve to share capital during the reporting period
√ Applicable □ Not applicable
| Number of bonus shares for every 10 shares | 0 |
| Amount of dividend for every 10 shares (tax included) (RMB) | 1.00 |
| Basis of the shares for distribution proposal | 1,286,097,106 |
| Amount of cash dividends (RMB) (tax included) | 128,609,710.60 |
| Cash dividend amount in other ways (such as share repurchase) (RMB) | 661,249,972.28 |
| Total amount of cash dividends (including other ways) (RMB) | 789,859,682.88 |
| Distributable profit (RMB) | 438,410,203.56 |
| Proportion of total cash dividends (including other ways) in distributable profit | 100% |
| Cash dividend of the reporting period | |
| If the Company is in the growth period and there are major capital expenditure arrangements, when the profit is distributed, the proportion of cash dividends in this profit distribution should be at least 20%. | |
| Details of the profit distribution proposal or share conversion proposal from capital reserve | |
| 1. Profit distribution plan in 2019: Based on the number of shares of the Company’s total share capital minus the number of repurchased shares as at the equity registration date of the implementation of this profit distribution plan, distribute a cash dividend | |
of RMB0.75 (tax included) for every 10 shares to all shareholders; no bonus shares will be issued and no capital reserve will beconverted into share capital.
2. Profit distribution plan in 2020: Based on the number of shares of the Company’s total share capital minus the number ofrepurchased shares as at the equity registration date of the implementation of this profit distribution plan, distribute a cash dividendof RMB1.00 (tax included) for every 10 shares to all shareholders; no bonus shares will be issued and no capital reserve will beconverted into share capital.In addition, the Company conducted share repurchase in 2020 and ended the share repurchase plan on May 21, 2020. A total of1,895,900 shares were repurchased, with a total amount of RMB27,680,721.76. Article 7 of the SZSE Guidelines No. 9 for theSelf-discipline and Supervision of Listed Companies—Repurchase of Shares stipulates that “Where a listed company uses cash asthe consideration and repurchases shares through offer or centralized bidding, the amount paid for share repurchase shall be deemedas cash dividend, which shall be included in the calculation of relevant cash dividend ratios of the year”. Therefore, the amountpaid by the Company for share repurchase, i.e. RMB27,680,721.76, is considered as cash dividend.
3. Profit distribution proposal in 2021: Based on the number of shares of the Company’s total share capital minus the number ofrepurchased shares as at the equity registration date of the implementation of this profit distribution plan, distribute a cash dividendof RMB1.00 (tax included) for every 10 shares to all shareholders; no bonus shares will be issued and no capital reserve will beconverted into share capital.In addition, the Company conducted share repurchase in 2021 and repurchased a total of 24,863,087 shares from January 27, 2021to November 24, 2021, with a total amount of RMB661,249,972.28. Article 7 of the SZSE Guidelines No. 9 for the Self-disciplineand Supervision of Listed Companies—Repurchase of Shares stipulates that “Where a listed company uses cash as the considerationand repurchases shares through offer or centralized bidding, the amount paid for share repurchase shall be deemed as cash dividend,which shall be included in the calculation of relevant cash dividend ratios of the year”. Therefore, the amount paid by the Companyfor share repurchase, i.e. RMB661,249,972.28, is considered as cash dividend.Note: The above table uses the total share capital as of March 31, 2022 minus the number of shares repurchased by the Company asthe basis for calculation. According to the principle of distribution ration remaining unchanged, the number at implementation willbe adjusted based on the total share capital as at the equity registration date of the implementation of the profit distribution plan,and the specific amount shall be subject to the actual distribution.
XI. Implementation of the Stock Incentive Plan, Employee Stock Ownership Plan, and OtherEmployee Incentives of the Company
√ Applicable □ Not applicable
1. Equity incentive
On May 21, 2021, the Company convened the 5th meeting of the fifth session of the Board of Directors and the3rd meeting of the fifth session of the Board of Supervisors, which considered and approved the Proposal onAchieving the Unlock Conditions of the Second Unlock Period for Restricted Stocks Awarded in the First Grantunder the Company’s 2018 Stock Option and Restricted Stock Incentive Plan. There were 499 holders of restrictedstocks meeting the unlock conditions, and the number of stocks that could be unlocked was 4,809,045. The unlockdate of these restricted stocks was June 30, 2021. The above meetings also reviewed and approved the Proposalon the Repurchase and Deregistration of Partial Restricted Stocks Awarded in the First Grant under theCompany’s 2018 Stock Option and Restricted Stock Incentive Plan. The Board of Directors of the Company
approved to repurchase and deregister a total of 2,021,305 restricted shares that had been granted but not unlocked.In addition, the aforesaid meetings also deliberated and approved the Proposal on Achieving the ExerciseConditions of the Second Exercise Period for Stock Options Awarded in the First Grant under the Company’s2018 Stock Option and Restricted Stock Incentive Plan. There were 2,274 holders of stock options meeting theexercise conditions, and the number of options that could be exercised was 2,948,559. The Proposal on theRepurchase and Deregistration of Partial Stock Options Awarded in the First Grant under the Company’s 2018Stock Option and Restricted Stock Incentive Plan was also considered and approved. The Board agreed toderegister 1,294,091 options that had been granted but not exercised.On June 18, 2021, the Company held the 6th meeting of the fifth session of the Board of Directors and the 4thmeeting of the fifth session of the Board of Supervisors, which reviewed and approved the Proposal on Adjustingthe Exercise Price of Stock Options. Pursuant to the Company’s profit distribution plan in 2020 and relevantprovisions of the 2018 Stock Option and Restricted Stock Incentive Plan (Draft), the Company adjusted theexercise price of first-granted stock options from RMB8.572/share to RMB8.472/share, and adjusted the exerciseprice of reserved stock options from RMB13.965/share to RMB13.865/share.On July 6, 2021, the cancellation procedures for 1,294,091 first-granted stock options that had been granted butnot exercised were completed at the Shenzhen Branch of China Securities Depository and Clearing CorporationLimited.On October 27, 2021, the repurchase and cancellation procedures for 2,021,305 first-granted restricted shares thathad been granted but not unlocked were completed at the Shenzhen Branch of China Securities Depository andClearing Corporation Limited.On November 30, 2021, the Company convened the 12th meeting of the fifth session of the Board of Directorsand the 7th meeting of the fifth session of the Board of Supervisors, which considered and approved the Proposalon Achieving the Unlock Conditions of the Second Unlock Period for Reserved Restricted Stocks under theCompany’s 2018 Stock Option and Restricted Stock Incentive Plan. A total of 37 incentive recipients of thereserved restricted stocks met the unlock conditions of the second unlock period, and the number of stocks thatcould be applied for unlock was 714,832. The unlock date was December 14, 2021. The above meetings alsoreviewed and approved the Proposal on Achieving the Exercise Conditions of the Second Exercise Period forReserved Stock Options under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan. A total of 70incentive recipients of the reserved stock options met the exercise conditions of the second exercise period, andthe number of options that could be exercised was 609,375. In addition, the Proposal on the Repurchase andDeregistration of Partial Reserved Restricted Stocks under the Company’s 2018 Stock Option and Restricted StockIncentive Plan was also reviewed and approved. The Company agreed to repurchase and deregister 139,428restricted shares that had been granted but not unlocked. In addition, the Proposal on the Repurchase andDeregistration of Partial Reserved Stock Options under the Company’s 2018 Stock Option and Restricted StockIncentive Plan was also considered and approved. The Company agreed to deregister 105,525 stock options thathad been granted but not exercised.On December 7, 2021, the cancellation procedures for 105,525 reserved stock options that had been granted butnot exercised were completed at the Shenzhen Branch of China Securities Depository and Clearing CorporationLimited.
On March 15, 2022, the cancellation procedures for 139,428 reserved restricted shares that had been granted butnot unlocked were completed at the Shenzhen Branch of China Securities Depository and Clearing CorporationLimited.Please continue to pay attention to the Company’s relevant announcements for subsequent implementationprogress or changes.Equity incentives granted to directors and senior management during the reporting period
√ Applicable □ Not applicable
Unit: share
| Name | Position | Number of stock options held at the beginning of the period | Number of stock options newly granted in the period | Number of shares exercisable during the period | Number of shares exercised during the period | Exercise price of shares exercised during the period | Number of stock options held at the end of the period | Market price at the end of the reporting period | Number of shares subject to selling restrictions at the beginning of the period | Number of shares unlocked during the period | Number of shares subject to selling restrictions newly granted in the period | Grant price of shares subject to selling restrictions | Number of shares subject to selling restrictions at the end of the period |
| Zhang Yang | Director, Vice President | 210,000 | 90,000 | 120,000 | |||||||||
| Yue Yong | Vice President | 770,000 | 330,000 | 440,000 | |||||||||
| Dong Ye | Chief Financial Officer | 35,000 | 15,000 | 15,000 | 8.472 | 20,000 | 16.71 | 105,000 | 45,000 | 60,000 | |||
| Lin Tiande | Vice President | 45,500 | 19,500 | 26,000 | |||||||||
| Zhao Ming | Vice President | 35,000 | 15,000 | 20,000 | |||||||||
| Zhang Gao | Supervisor | 38,500 | 16,500 | 22,000 | |||||||||
| Ye Longfang (resigned) | Vice President | 350,000 | 150,000 | 350,000 | 16.71 | ||||||||
| Dai Zhenji (resigned) | Director, Joint | 700,000 | 300,000 | 300,000 | 8.572 | 0 | 16.71 | 1,400,000 | 0 | 0 |
| President | ||||||||||||||
| Liu Jinfeng (resigned) | Director, Vice President | 700,000 | 300,000 | 700,000 | 16.71 | 756,000 | 324,000 | 432,000 | ||||||
| Total | -- | 1,785,000 | 0 | 765,000 | 315,000 | -- | 1,070,000 | -- | 3,360,000 | 840,000 | 0 | -- | 1,120,000 | |
| Remarks (if any) | 1. During the second exercise period for stock options awarded in the first grant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan, the exercise ratio was 30% and the start dates for exercise was June 30, 2021 and December 14, 2021, respectively. Mr. Dong Ye and Mr. Dai Zhenji exercised the rights during the reporting period while Mr. Liu Jinfeng and Ye Longfang did not exercise the rights during the reporting period. 2. During the second unlocking period for restricted stocks awarded in the first grant and reserved restricted stocks under the 2018 Stock Option and Restricted Stock Incentive Plan, the unlocking ratio was 30% and the dates of releasing from sales restrictions were June 30, 2021 and December 14, 2021, respectively. The restricted shares held by the above staff at the beginning of the period have been unlocked as per 30%. 3. Mr. Dai Zhenji resigned on April 28, 2021. As of the end of the reporting period, the Company has repurchased and deregistered the restricted shares and stock options awarded to him but not yet unlocked. 4. Mr. Ye Longfang resigned on October 27, 2021. Stock options awarded to him but not yet exercised will be deregistered in accordance with relevant regulations. 5. Mr. Liu Jinfeng resigned his positions of director and Vice President on March 23, 2022. | |||||||||||||
Performance appraisal and incentives of senior managementThe Company comprehensively appraises the performance of senior executives in compliance with provisions ofthe Remuneration Management System for Directors, Supervisors and Senior Management and in combinationwith annual financial budgets, production and operation indicators and the attainment of management objectives.Their individual incomes are linked with the business performance of the Company. During the reporting period,incentives to the Company’s senior management mainly included remuneration incentive, equity incentive planand employee stock ownership plan, with a purpose of effectively stimulating the work enthusiasm of the seniormanagement, promoting the steady improvement of the Company’s performance, achieving its developmentstrategies and business objectives, and maintaining a steady and sound development.The Company rolled out the second phase equity incentive plan in December 2018 under which employees weremotived in the form of restricted shares + stock options. The unlocking/exercise for the second phase wascompleted during the reporting period.The Company introduced the second phase employee stock ownership plan in 2019 to motivate directors, seniorexecutives and backbone employees. The liquidation and distribution of the plan were completed in January 2021.
2. Implementation of the employee stock ownership plan
√ Applicable □ Not applicable
All valid employee stock ownership plans during the reporting period
| Scope of employees | Number of | Total shares held | Changes | Proportion to | Source of |
| entitled employees | the total share capital of the listed company | funds for implementing the plan | |||
| Directors, senior executives and backbone employees of the Company | 66 | 11,709,583 | The Company convened the 18th meeting of the fourth session of the Board of Directors on November 11, 2019, which reviewed and approved the Proposal on the Phase II Employee Stock Ownership Plan (Draft) and Its Summary. In accordance with market conditions, the Company canceled financing from banks, with all funds being raised by participants themselves. Relevant terms and provisions were revised at the same time. | 0.91% | Employees’ legitimate remuneration, self-raised funds and other methods permitted by laws and administrative regulations |
Shareholdings of directors, supervisors and senior management in the Employee Stock Ownership Plan during the reporting period
| Name | Position | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period | Proportion to the total share capital of the listed company |
| Deng Yingzhong | Director | 1,810,402 | 0 | 0.00% |
| Deng Guanbiao | Vice Chairman | 724,161 | 0 | 0.00% |
| Deng Guanjie | Vice Chairman | 724,161 | 0 | 0.00% |
| Zhang Yang | Director, Vice President | 460,083 | 0 | 0.00% |
| Yue Yong | Vice President | 724,161 | 0 | 0.00% |
| Lin Tiande | Vice President | 12,069 | 0 | 0.00% |
| Dong Ye | Chief Financial Officer | 241,387 | 0 | 0.00% |
| Dai Zhenji (resigned) | Director, Joint President | 724,161 | 0 | 0.00% |
| Zhou Qichao (resigned) | Board Secretary, Vice President | 724,161 | 0 | 0.00% |
| Ye Longfang (resigned) | Vice President | 362,080 | 0 | 0.00% |
| Liu Jinfeng (resigned) | Director, Vice President | 724,161 | 0 | 0.00% |
Changes in asset management institution during the reporting period
□ Applicable √ Not applicable
Changes in equity due to disposal of shares by holders during the reporting period
□ Applicable √ Not applicable
Exercise of shareholder rights during the reporting periodNoneOther situations of the employee stock ownership plan during the reporting period and explanation
√ Applicable □ Not applicable
The lockup period for the Phase II Employee Stock Ownership Plan expired on November 28, 2020. As of
January 5, 2021, all stocks held under the Company’s Phase II Employee Stock Ownership Plan, i.e. 11,709,583shares, had been sold out. As per relevant provisions, the implementation of the Phase II Employee StockOwnership Plan is completed and thus terminatedChanges in the members of the management committee of the employee stock ownership plan
□ Applicable √ Not applicable
Financial impact of the employee stock ownership plan on the listed company during the reporting period and related accountingtreatment
□ Applicable √ Not applicable
Termination of employee stock ownership plan during the reporting period
√ Applicable □ Not applicable
The Company held the 5th meeting of the fifth session of the Board of Directors and the Fourth ExtraordinaryGeneral Meeting on May 21 and June 7, 2021, respectively, which considered and approved the Proposal on thePhase III Employee Stock Ownership Plan (Draft) and Its Summary and other relevant proposals. As such, theimplementation of the Phase III Employee Ownership Plan was approved.On November 30, 2021, the Company convened the 12th meeting of the fifth Session of the Board of Directorsand the 7th meeting of the fifth Session of the Board of Supervisors, which reviewed and approved the Proposalon Terminating the Phase III Employee Stock Ownership Plan. Ever since review procedures for the Phase III planwere complement, the management of the Company has been actively promoting its implementation and hascommunicated with employee representatives many times regarding its specific implementation. Employeesparticipating in this Plan fully recognize the original intention of the Plan. The Company has held internalcommunication meetings and actively communicated with financial institutions to carry out financing work.However, considering changes in relevant financial policies plus market reasons, it is difficult to continue pushingforward the Plan. To better safeguard the interests of the Company, shareholders and employees, the Company hasdecided to terminate the Phase III Employee Stock Ownership Plan upon careful consideration in accordance withrelevant regulations.Other description: None
3. Other employee incentives
□ Applicable √ Not applicable
XII. Construction and Implementation of Internal Control Systems during the ReportingPeriod
1. Internal control construction and implementation
During the reporting period, the Company continued to improve its internal control system and strengthen thesupervision function of internal audit. It streamlined and improved the functions and responsibilities of the AuditCommittee and internal audit departments and solidified the supervision power under the leadership of the Boardof Directors. Supervision was strengthened with regard to internal audit department’s implementation of the
internal control system, while the depth and breadth of internal audit work were enhanced. In addition, theCompany continued to strengthen the internal control awareness and responsibilities of executives and employees,so that they fully understand the importance of a complete internal control system in improving corporatemanagement, enhancing risk prevention and control and facilitating the high-quality quality of enterprises. TheCompany also solidified the compliance operation awareness to ensure the effective enforcement of the internalcontrol system, improve standardized operation level and enable healthy and sustainable corporate development.Based on the identification of material internal control defects of the financial report category, the Company hasno material internal control defect of financial reports as at the base date of the internal control assessment report.The Company has maintained effective internal control over financial reporting in accordance with requirementsof the enterprise internal control standard system and other relevant regulations. Based on the identification ofmaterial internal control defects of the non-financial report category, the Company has no material internal controldefect of non-financial reports as at the base date of the internal control assessment report.
2. Particulars of material internal control defects detected during the reporting period
□ Yes √ No
XIII. Management and Control of the Company for Subsidiaries during the Reporting Period
| Name of company | Integration plan | Integration progress | Problems in integration | Solutions taken | Solution progress | Subsequent solution plan |
| Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
XIV. Self-assessment Report on Internal Control or Internal Control Audit Report
1. Self-assessment report on internal control
| Date of disclosure of the full text of the internal control assessment report | April 28, 2022 |
| Disclosure index of full text of the internal control assessment report | Please refer to the 2021 Self-assessment Report on Internal Control of C&S Paper Co., Ltd. published on CNINFO (http://www.cninfo.com.cn) for details. |
Percentage of total assets of unitsincluded in the assessment scope tothe total assets in the Company’sconsolidated financial statements
| 99.73% | |
| Percentage of total operating income of units included in the assessment scope to the operating income in the Company’s | 99.96% |
| consolidated financial statements | ||
| Defect identification criteria | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | Material defect: refers to one or a combination of control defects that may cause the Company to materially deviate from the objectives of internal control. When there are one or several material defects in internal control, it should be concluded that the internal control is invalid in the internal control assessment report. (1) Directors, supervisors and senior management have committed fraud and caused serious losses and severe adverse impacts to the company. (2) Corrections were made to published financial reports due to significant accounting errors. (3) Significant errors in the current financial reports were identified by the certified public accountants but not by internal control. (4) The internal control and supervision by the company’s audit committee and internal audit were invalid, or significant problems were found but not corrected. Major defect: refers to one or a combination of defects in internal control that is with less severity than a material defect, but may still cause the Company to deviate from the objectives of internal control. A major defect is less severe than a material defect and would not seriously endanger the overall effectiveness of internal control, but should arouse the sufficient attention of the board of directors and mangers. (1) Failure to select and apply accounting policies based on generally accepted accounting standards; (2) There were one or multiple defects in the financial reports of the current period that did not meet the criteria for material defect. (3) There were one or multiple defects in the control of the financial reporting process at the end of the period such that the authenticity and completeness of the prepared financial reports could not be reasonably guaranteed. General defect: refers to defects other than material | Non-financial report defects are identified mainly based on their degree of impact on business processes and their probability of occurrence. A defect is termed as a general defect if its probability of occurrence is low or the defect reduces work efficiency or effectiveness, or increases the uncertainty of effects or causes deviations from expected objectives. A defect is termed as a major defect if its probability of occurrence is relatively high or the defect significantly reduces work efficiency or effectiveness, or significantly increases the uncertainty of effects or causes obvious deviations from expected objectives. A defect is termed as a material defect if its probability of occurrence is high or the defect severely reduces work efficiency or effectiveness, or severely increases the uncertainty of effects or causes severe deviations from expected objectives. |
| defect or major defect. | ||
| Quantitative criteria | General defect: The misstated amount is less than 0.5% of operating income. Major defect: The misstated amount is between 0.5% (inclusive) and 1.5% of the operating income. Material defect: The misstated amount is more than 1.5% (inclusive) of operating income. | General defect: The direct property losses are less than 0.5% of operating income. Major defect: The direct property losses are between 0.5% (inclusive) and 1.5% of operating income. Material defect: The direct property losses are more than 1.5% (inclusive) of operating income. |
| Number of material defects in financial reports | 0 | |
| Number of material defects in non-financial reports | 0 | |
| Number of major defects in financial reports | 0 | |
| Number of major defects in non-financial reports | 0 | |
2. Internal control audit report
□ Applicable √ Not applicable
XV. Rectification of Detected Problems in the Corporate Governance Special Action of ListedCompanies
Not applicable
Section V Environmental and Social ResponsibilitiesI. Main Environmental Protection IssuesWhether the listed company and its subsidiaries are the key pollution discharge units published by the environmental protection department
√ Yes □ No
| Name of company or subsidiary | Main pollutants and particular pollutants | Ways of discharge | Number of discharge outlets | Distribution of discharge outlets | Concentration of discharge | Implemented pollutant discharge standards | Total discharge | Total approved discharge | Excessive discharge |
| Jiangmen C&S | Waste water - COD | Discharge directly to the centralized sewage treatment plant | 1 | Centralized processing facilities in the factory | 31.873 mg/L | 200 mg/L | 13.751t | 335.600 t/a | None |
| Jiangmen C&S | Waste water - Ammonium nitrate | Discharge directly to the centralized sewage treatment plant | 1 | Centralized processing facilities in the factory | 2.576 mg/L | 8 mg/L | 1.111t | 13.4 t/a | None |
| Jiangmen C&S | Waste water - Total nitrogen | Discharge directly to the centralized sewage treatment plant | 1 | Centralized processing facilities in the factory | 7.949 mg/L | 12 mg/L | 3.43t | / | None |
| Jiangmen C&S | Waste water - Total phosphorus | Discharge directly to the centralized sewage treatment plant | 1 | Centralized processing facilities in the factory | 0.045 mg/L | 0.8 mg/L | 0.019t | / | None |
| Sichuan C&S | Waste water - COD | Discharge to the water purification station through urban sewage pipeline after treatment | 1 | Production waste water discharge (DW001) flows through the channel into the main outlet DW002 (confluent with domestic waste water) | 48 mg/L | 80 mg/L | 50.188t | 96 t/a | None |
| Sichuan C&S | Waste water - Ammonium nitrate | Discharge to the water purification station through urban sewage pipeline after treatment | 1 | Production waste water discharge (DW001) flows through the channel into the main outlet DW002 (confluent with domestic waste water) | 0.203 mg/L | 8 mg/L | 0.2121t | 9.6 t/a | None |
| Sichuan C&S | Waste gas - PM (particulate matter) | Discharge directly through the flue | 3 | Three chimneys (2# boiler is the standby boiler, monitoring when being used) | 1# boiler 2.5 mg/m? 2# boiler 0 mg/m? 3# boiler 2.7 mg/m? | 20 mg/Nm3 | 0.2738t | / | None |
| Sichuan C&S | Waste gas - Nitrogen oxide | Discharge directly through the flue | 3 | Three chimneys (2# boiler is the standby boiler, monitoring when being used) | 1# boiler 27 mg/m? 2# boiler 0 mg/m? 3# boiler 29 mg/m? | 150 mg/Nm3 | 5.0359t | 31.35 t/a | None |
| Sichuan C&S | Waste gas - Sulfur dioxide | Discharge directly through the flue | 3 | Three chimneys (2# boiler is the standby boiler, monitoring when being used) | 0 | 50 mg/Nm3 | 0 | / | None |
| Zhejiang C&S | Waste water - COD | Discharge to Jiaxing Industrial Sewage Treatment Plant through municipal pipe after treatment | 1 | Centralized processing facilities in the factory | 49.02 mg/L | 500 mg/L | 9.7551 mg/L | 13.97 t/a | None |
| Zhejiang C&S | Waste water - Ammonium nitrate | Discharge to Jiaxing Industrial Sewage Treatment Plant through municipal pipe after treatment | 1 | Centralized processing facilities in the factory | 2.069 mg/L | 35 mg/L | 0.43 mg/L | 9.78 t/a | None |
| Tangshan C&S | Waste water - COD | Discharge to the Lvyuan Sewage Treatment Plant in the zone after being treated by the | 1 | Main outlet of the zone (Lvyuan Sewage Treatment Plant) | 28.3 mg/L | ≤ 50mg/L | 7.4t | 16.5 t/a | None |
| plant sewage treatment station | |||||||||
| Tangshan C&S | Waste water - Ammonium nitrate | Discharge to the Lvyuan Sewage Treatment Plant in the zone after being treated by the plant sewage treatment station | 1 | Main outlet of the zone (Lvyuan Sewage Treatment Plant) | 0.466 mg/L | ≤ 5mg/L | 0.124t | 1.65 t/a | None |
| Tangshan C&S | Waste gas - PM (particulate matter) | Discharge directly through the flue | 1 | One chimney | 2.2 mg/m3 | ≤ 5 mg/m3 | 0.17t | 2.46 t/a | None |
| Tangshan C&S | Waste gas - Nitrogen oxide | Discharge directly through the flue | 1 | One chimney | 20.54 mg/m3 | ≤ 30 mg/m3 | 1.6t | 18.46 t/a | None |
| Tangshan C&S | Waste gas - Sulfur dioxide | Discharge directly through the flue | 1 | One chimney | 0 mg/m3 | ≤ 10 mg/m3 | 0 | 6.15 t/a | None |
| Hubei C&S | Waste water - COD | Discharge indirectly (discharge to Biquan Sewage Treatment Plant through municipal pipe after treatment) | 1 | Discharge to Biquan Sewage Treatment Plant after pre-processing with centralized processing facilities in the factory, | 133 mg/L | ≤ 400mg/L | 51.33 t/a | 152.25 t/a | None |
| Hubei C&S | Waste water - Ammonium nitrate | Discharge indirectly (discharge to Biquan Sewage Treatment Plant through municipal pipe after treatment) | 1 | Discharge to Biquan Sewage Treatment Plant after pre-processing with centralized processing facilities in the factory, | 7.13 mg/L | ≤ 30mg/L | 3.55 t/a | 15.25 t/a | None |
| Hubei C&S | Waste gas - PM (particulate matter) | Organized discharge (dedusting by bag filter, desulfurization by limestone-gypsum and denitration by SNCR) | 1 | One chimney | 9.69 mg/m3 | ≤ 30 mg/m3 | 10.09 t/a | 28.63 t/a | None |
| Hubei C&S | Waste gas - Sulfur | Organized discharge | 1 | One chimney | 56 mg/m3 | ≤ 200 | 63.87 t/a | 203.87 t/a | None |
| dioxide | (dedusting by bag filter, desulfurization by limestone-gypsum and denitration by SNCR) | mg/m3 | |||||||
| Hubei C&S | Waste gas - Nitrogen oxide | Organized discharge (dedusting by bag filter, desulfurization by limestone-gypsum and denitration by SNCR) | 1 | One chimney | 86 mg/m3 | ≤ 200 mg/m3 | 86.49 t/a | 239.85 t/a | None |
| Yunfu C&S | Waste water - COD | Discharge directly | 1 | Sewage treatment station in the factory | ≦80 mg/l | 80 mg/L | 70.66 t/a | 197.71 t/a | None |
| Yunfu C&S | Waste water - Ammonium nitrate | Discharge directly | 1 | Sewage treatment station in the factory | ≦8 mg/l | 8 mg/L | 7.01 t/a | 19.76 t/a | None |
Construction and operation of pollution prevention and control facilities
(1) Duty toward compliance: The Company and its subsidiaries and branches strictly abide by national and localenvironmental laws and regulations. All new projects strictly implement the environmental impact assessmentsystem and "three simultaneous" system. All production activities strictly comply with the EnvironmentalProtection Law of the People’s Republic of China, the Law of the People’s Republic of China on the Preventionand Control of Water Pollution, the Law of the People’s Republic of China on the Prevention and Control ofAtmospheric Pollution, the Law of the People’s Republic of China on the Prevention and Control ofEnvironmental Pollution by Solid Waste and the Action Plan for Prevention and Control of Water Pollution, andensure that all pollutant treatment and discharge are in line with the requirements of laws and regulations.
(2) Configuration and operation of water treatment equipment and facilities: Each subsidiary or branch has acomplete array of environmental protection treatment equipment and facilities. The main sewage treatmentprocesses are anaerobic, aerobic and subsequent deep treatment processes, which can achieve the dischargestandards of various sewage indicators. In addition, each subsidiary or branch is equipped with a recycling watersystem in which the reclaimed water that meets the usage standard is used for re-production to reduce thedischarge of sewage as far as possible. The sewage of Jiangmen C&S, Zhejiang C&S, Hubei C&S and TangshanC&S is discharged after centralized treatment in the company and treated by the local sewage treatment plants.After centralized treatment in the company, the sewage of Sichuan C&S enters water purification station throughurban sewage pipeline. The sewage of Yunfu C&S, after treated by the company’s sewage treatment station andreaching the standard, is discharged in an organized manner.
(3) Online monitoring and operation of water treatment facilities: Five subsidiaries or branches in Sichuan,Zhejiang, Tangshan, Yunfu and Hubei have all installed on-line sewage monitoring facilities, which are directlysupervised by local environmental protection bureau. The sewage of Tangshan C&S, after centralized treatment inthe subsidiary, is discharged to the sewage plant of the local paper industry base without any other sewage outlet.The company has its own monitoring facilities for internal control reference. After the centralized treatment withinthe company, the sewage of Jiangmen C&S is discharged to the sewage plant of the local paper industry base;there is no other sewage outlet and no online monitoring facilities. The environmental protection bureau goes tothe company regularly every quarter to compare the on-line monitoring data, which all meet the requirements.
(4) Boiler waste gas emission: Sichuan C&S and Tangshan C&S are equipped with natural gas boilers. HubeiC&S is equipped with a coal-fired boiler, and waste gas is emitted uniformly after desulfurization anddenitrification. Boiler waste gas emission conforms to GB13271-2014 Emission Standard of Air Pollutants forBoiler.
Environmental impact assessment of construction projects and other administrative permits forenvironmental protection
(1) Administrative permits: According to the Measures for the Administration of Pollutant Discharge Permit of theMinistry of Environmental Protection of the People’s Republic of China, the applications were submitted to theEnvironmental Protection Bureau. All the subsidiaries and branches completed the renewal and change of thepollutant discharge permit in June 2021.
(2) Construction projects: the Company has always been strictly in accordance with environmental laws andregulations to implement the control of construction projects. Environmental impact assessment was carried outfor all construction projects and environmental protection project construction was arranged according toconstruction plan, to ensure that the environmental protection facilities and the main project are designed,constructed and put into use at the same time. At present, all construction projects put into production havecompleted environmental impact assessment and acceptance and approval.
Emergency plan for sudden environmental events
(1) Preparation and reporting of emergency plan for sudden environmental events: The Company strictlyimplements emergency response rules for sudden environmental events, and, in accordance with the technicalrequirements in the Technical Guidelines for Preparation of Emergency Plans for Environmental PollutionAccidents, employs a professional advisory and guidance organization to formulate the Emergency Plan forSudden Environmental Events, which has been reviewed by and filed with the Environmental Protection Bureau.
(2) Emergency response supplies, training and drill: The Company has matched the corresponding emergencyresponse supplies according to the requirements of the Emergency Plan for Sudden Environmental Events.Emergency response measures for hazardous chemicals have been prepared according to environmental protectionrequirements, and necessary labor protection supplies and emergency response supplies have been provided inaccordance with safety technical instructions, and checked and updated regularly. The Company regularly carriesout emergency training and drill and suitability assessment of the emergency plan to ensure the effectiveness andenforceability of the emergency plan.
Environmental self-monitoring program
(1) Self-monitoring ledger: The Company strictly abides by laws and regulations, carries out self-monitoring workin accordance with environmental protection requirements, establishes environmental management ledger anddata, and constantly improves it.
(2) Waste water monitoring: At present, self-monitoring is a combination of manual monitoring and automaticmonitoring, and qualified units are entrusted to carry out monitoring regularly. Automatic monitoring items: maindischarge outlet of waste water (COD, ammonium nitrate, flow rate, PH, total nitrogen); Manual monitoring items:
BOD, SS and chroma indicators are monitored daily or weekly; for other sewage monitoring items, uncontrolledemissions, solid waste and factory boundary noise, each subsidiary entrusts qualified units to carry out monitoringwork monthly or quarterly according to the local environmental protection requirements.
(3) Waste gas monitoring: The main testing items are nitrogen oxide, ringelman emittance, sulfur dioxide, soot,mercury and their compounds. The testing frequency is in compliance with the requirements of regulations.
(4) The self-monitoring data of pollutant discharge and environmental monitoring plans are disclosed onprovincial disclosure websites for key pollution source information while paper reports are submitted to theEnvironmental Protection Bureau for archival.Administrative penalties due to environmental issues during the reporting period
| Name of company or subsidiary | Reason of penalty | Violation | Penalty result | Impact on production and operation of the listed company | Rectification measures of the Company |
| Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
Other environmental information that should be disclosed
(1) Emission permit information and environmental protection information related to emission permitrequirements are available on national emission permit management information platform; in the event thatcompetent government departments in the localities of the subsidiaries and branches have additional requirements,such information is published on the platform for environmental information reporting prescribed by the localgovernment authority.
(2) Other environmental protection-related information is available in the "News" section of the Company’swebsite.Measures taken to reduce carbon emissions during the reporting period and their effects
√ Applicable □ Not applicable
In order to further reduce pollution, improve resource utilization efficiency and reduce production costs as well asheat consumption and emission, Zhejiang C&S, under the advocacy of competent local government departments,implemented 19 cleaner production programs, which achieved tangible results and attained the expected goals forcleaner production and carbon reduction.
Other relevant information on environmental protection: None
II. Corporate Social ResponsibilitiesThe Company actively fulfills and discloses corporate social responsibilities (CSR). Abiding by the principle ofintegrity and its commitments, it strives to safeguard the legitimate rights and interests of all stakeholdersincluding shareholders, employees, consumers, partners and the society at large and thereby makes duecontribution to sustainable development of the society and the environment. For details on CSR fulfillment, pleaserefer to the Company’s 2021 Environmental, Social and Governance (ESG) Report published on the designatedinformation disclosure media www.cninfo.com.cn.III. Efforts Regarding Poverty Alleviation and Rural RevitalizationAs a nation enterprise with important social influence and a leading enterprise in the household paper industry, theCompany actively responds to the call of national policies to consolidate and expand poverty alleviation and ruralrevitalization work. Specifics are as follows:
1. In January 2021, Jiangmen C&S organized party members to visit local elderly in need and donated suppliesworth RMB3,200.
2. In June 2021, Jiangmen C&S organized party members to visit local widows and lonely elderlies before theDragon Boat Festival and donated a total of RMB4,182 in supplies. In addition, in order to support the educationdevelopment of Shuangshui Town, Jiangmen C&S participated in the fundraising activity of “Dr. Huang KejingSchool Smart Blackboard Program” organized by the local education promotion association and contributedRMB50,000.
3. In November 2021, Jiangmen C&S donated RMB30,000 to support the road construction project of the YaqianVillagers Committee, Shuangshui Town.
4. In December 2021, Sichuan C&S participated in the “Ten Thousand Enterprises Aiding Ten Thousand Villages”– Heishui County Revitalization Project organized by Pengzhou Municipal Federation of Industry and Commerceand donated RMB5,000.
Section VI Significant EventsI. Implementation of Commitments
1. Commitments completed by actual controllers, shareholders, related parties, purchasers, or the Company within the reporting period and commitmentsnot fulfilled by the end of the reporting period
√ Applicable □ Not applicable
| Cause of Commitment | Undertaking Party | Type of commitment | Content of commitment | Time of commitment | Term of commitment | Fulfillment of commitment |
| Share reform commitment | / | / | / | / | / | / |
| Commitments in the acquisition report or the equity change report | / | / | / | / | / | / |
| Commitments made during asset restructuring | / | / | / | / | / | / |
| Commitments made during the initial public offering or refinancing | Directors, supervisors, and senior management | Commitments of shares subject to selling restrictions | Directors, supervisors, and senior management promise that they will not transfer more than 25% of the total shares of the Company they hold each year during the term of office. If they leave office before the expiry of the term of office, they promise not to transfer more than 25% of the total shares of the Company they hold each year within the term of office and within six months after the term of office expires (which is agreed when they took office). Moreover, they will not transfer their shares of the Company within half a year | November 25, 2010 | Long-term | Strictly observed |
| after they leave office. | ||||||
| Equity incentive commitments | Liu Jinfeng | Other commitments | He promises not to sell all their shares (including shares obtained from exercise and other shares) within six months after the end of the exercise of the last stock options. Besides, they promise to strictly conform to stock trading-related laws and regulations. | November 12, 2020 | During the implementation of the equity incentive plan | Strictly observed |
| Dong Ye, Ye Longfang | Other commitments | They promise not to sell all their shares (including shares obtained from exercise and other shares) within six months after the end of the exercise of the last stock options. Besides, they promise to strictly conform to stock trading-related laws and regulations. | June 25, 2021 | During the implementation of the equity incentive plan | Strictly observed | |
| Other commitments to minority shareholders | Deng Yingzhong, Deng Guanbiao, Deng Guanjie, and Guangdong Zhongshun Paper Group Co., Ltd. | Not-to-compete commitments | They promise not to compete with the Company in the same business. | January 01, 2009 | Long-term | Strictly observed |
| C&S Paper Co., Ltd. | Cash dividend commitments | Cash dividends shall be distributed when dividend conditions are met. The Board of Directors of the Company shall comprehensively consider industry characteristics, development stage, business model, profitability, and major capital spending (if any), distinguish the following circumstances, and propose differentiated cash dividend policies in compliance with the procedures stipulated in the Articles of Association. | August 28, 2014 | Long-term | Strictly observed | |
| C&S Paper Co., Ltd. | Other commitments | The 2019 repurchase plan was terminated due to objective reasons. The Company will perform the necessary procedures and immediately restart the repurchase work upon the end of the exercise period. | May 21, 2020 | The Company reviewed and passed the share repurchase plan on January 5, 2021, and will continue the share repurchase | Completed |
| plan/ | |||||
| Deng Yingzhong | Other commitments | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | November 04, 2020 | Within six months from the completion of the share increase plan (November 05, 2020 - May 04, 2021) | Completed |
| Chen Haiyuan | Other commitments | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | May 18, 2021 | Within six months from the completion of the share increase plan (May 29, 2021 - November 28, 2021) | Completed |
| Li Zhaojin | Other commitments | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | May 12, 2021 | Within six months from the completion of the share increase plan (May 19, 2021 - November 18, 2021) | Completed |
| Liu Peng | Other commitments | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | May 13, 2021 | Within six months from the completion of the share | Completed |
| increase plan (May 14, 2021 - November 13, 2021) | |||||
| Li Youquan | Other commitments | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | May 11, 2021 | Within six months from the completion of the share increase plan (May 12, 2021 - November 11, 2021) | Completed |
| Deng Wenxi | Other commitments | She promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods in strict accordance with relevant laws and regulations. | May 11, 2021 | Within six months from the completion of the share increase plan (May 13, 2021 - November 12, 2021) | Completed |
| Deng Yingzhong | Other commitments | For all employees who purchase C&S Paper stocks (no less than 1,000 shares) between May 10 and May 31, 2021 and hold them continuously until May 30, 2022 while still serving in the Company by then, any losses incurred from the aforesaid stocks will be fully compensated by Mr. Deng Yingzhong while any profits generated will entirely belong to the employee. | May 07, 2021 | May 10, 2021 - June 30, 2022 | Strictly observed |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Other commitments | They promise not to reduce or pledge any shares they hold directly or indirectly in the Company in any way from May 9, 2021 to May 30, 2022, including new shares added due to the transfer of capital reserve into share capital or distribution of stock dividends for the aforementioned shares during the | May 09, 2021 | May 10, 2021 - May 30, 2022 | Strictly observed |
| commitment period. For any violation of the above commitment, all the incurred earnings will belong to the Company. | ||||||
| Liu Peng, Chen Haiyuan, Liang Yongliang, Li Youquan, Yue Yong, Zhou Qichao, Ye Longfang, Dong Ye, Li Zhaojin, and Deng Wenxi | Other commitments | They promise not to reduce or pledge any shares they hold directly or indirectly in the Company from the date when the Letter of Commitment is signed (i.e. May 14, 2021) to December 31, 2021, including new shares added due to the transfer of capital reserve into share capital or distribution of stock dividends for the aforementioned shares during the commitment period. For any violation of the above commitment, all the incurred earnings will belong to the Company. | May 14, 2021 | May 14, 2021 - December 31, 2021 | Completed | |
| Zhou Qichao | Other commitments | He promises not to reduce any shares he or his parents, spouse or children hold in the Company directly or indirectly in the Company in any way within 12 months from the last reduction of the Company’s shares in 2021 (i.e. February 5, 2021), including new shares added due to the transfer of capital reserve into share capital or distribution of stock dividends for the aforementioned shares during the commitment period. For any violation of the above commitment, all the incurred earnings will belong to the Company. | July 10, 2021 | February 05, 2021 - February 4, 2022 | Strictly observed | |
| Whether commitments are fulfilled on time | Yes | |||||
2. If there are assets or projects of the Company which have profit forecast while the reporting period isstill in the forecast period, the Company should state whether the assets or projects have attained the profitforecast and explain reasons
□ Applicable √ Not applicable
II. Appropriation of Funds for Non-operating Purposes by Controlling Shareholder and ItsRelated Parties
□ Applicable √ Not applicable
During the reporting period, the Company did not have any funds appropriated for non-operating purposes by the controllingshareholder and its related parties.III. External Guarantee in Violation of Prescribed Procedures
□ Applicable √ Not applicable
During the reporting period, there was no external guarantee in violation of prescribed procedures.VI. Explanation by the Board of Directors of the “Non-standard Audit Report” of the LatestPeriod
□ Applicable √ Not applicable
V. Explanation by the Board of Directors, the Board of Supervisors, and IndependentDirectors (if any) of the "Non-standard Audit Report" for the Reporting Period Issued by theAccounting Firm
□ Applicable √ Not applicable
VI. Explanation of Changes in Accounting Policies and Estimates or Correction of SignificantAccounting Errors Compared with the Financial Report of Last Fiscal Year
√ Applicable □ Not applicable
1. Accounting policy changes
1) Accounting policy changes resulted from the execution of the New Revenue StandardsOn December 7, 2018, the Ministry of Finance issued the revised Accounting Standards for Business EnterprisesNo. 21 -- Leases (C.K. [2018] No. 35) (hereinafter referred to as the “New Lease Standards”). As passed under aresolution at the 5th meeting of the fifth session of the Board of Directors on May 21, 2021, the Company startedto enforce the aforesaid New Lease Standards from January 1, 2021 and adjusted related accounting policiesaccordingly.Pursuant to the New Lease Standards, for contracts that already exist prior to the enforcement of the newstandards, the Company chooses not to re-evaluate whether they are a lease or contain a lease.The Company only adjusts the cumulative impact number for lease contracts that have been yet been completed asof January 1, 2021. The amounts of retained earnings and other relevant items in the financial statements at the
beginning of the period for the first time adoption of the new standards (i.e. January 1, 2021) are adjusted basedon the accumulative impact amount at the first time adoption, while comparative financial information for theprevious accounting periods is not adjusted.The Company’s specific processing and its impact on the date of fist-time adoption of the new standards (i.e.January 1, 2021) are as follows:
A The Company as the lessee:
For finance leases on the adoption date of the new standards, if the Company is the lessee, it measures theright-of-use assets and lease liabilities according to the original book value of the financial leased assets and thefinancial lease payables. For operating leases on the adoption date of the new standards, the Company, as thelessee, measures lease liabilities according to the present value of the remaining lease payments discounted at theincremental borrowing rate on the adoption date of the new standards; the unpaid rent accrued on an accrual basisunder the original lease standards is included in the remaining lease payments.For operating leases prior to the adoption date of the new standards, the Company measures the right-of-use assetbased on the amount equal to the lease liability and makes necessary adjustments based on prepaid rents. TheCompany conducts an impairment test on the right-of-use assets on the adoption date and adjusts the book valueof the right-of-use assets.For operating leases where the leased assets belong to low-value assets prior to the adoption date, the Companydoes not recognize as right-of-use assets and lease liabilities For operating leases other than low-value asset leasesat the adoption date, the Company applies one or more of the following simplified treatments for each lease:
· Leases to be completed within 12 months of the adoption date are treated as short-term leases;· When measuring lease liabilities, the same discount rate is used for leases with similar characteristics;· The measurement of the right-of-use assets excludes initial direct costs;· If there is an option to renew or terminate the lease, the Company determines the lease term based on the
actual exercise of the option before the adoption date and other latest conditions;· If there is a lease change before the adoption date, the company will carry out accounting treatmentaccording to the final arrangement of the lease change.B. Main changes and impacts of the implementation of the New Lease StandardsThe houses and buildings leased by the company were originally treated as operating leases. According to the newstandards, on January 1, 2021, the Company recognized right-of-use assets of RMB 12,852,715.53, leaseliabilities of RMB 8,089,819.67, and non-current liabilities due within one year of RMB 4,762,895.86.Impacts on the financial statements dated January 1, 2021 are listed in the following:
| Statement item | Amount on December 31, 2020 (prior to change) | Amount on January 1, 2021 (after change) | ||
| Consolidated statement | Parent Company’s statement | Consolidated statement | Parent Company’s statement | |
| Right-of-use assets | 12,852,715.53 | 3,161,008.25 | ||
| Lease liabilities | 8,089,819.67 | 1,858,811.04 | ||
| Non-current liabilities due within one year | 4,762,895.86 | 1,302,197.21 | ||
The weighted average of the incremental borrowing rate used by the Company on its lease liabilities in its balancesheet dated January 1, 2021 is 4.75%.The adjustment process for the difference between the unpaid minimum lease payments for major operating leasesat the end of 2020 as disclosed in its 2020 annual financial statements and those included in lease liabilities onJanuary 1, 2021 is as follows:
| Item | Consolidated statement | Parent Company’s statement |
| Minimum lease payments of major operating leases at December 31, 2020 | 14,874,019.59 | 3,189,784.64 |
| Less: Lease payments with simplified treatment | 1,295,863.18 | |
| Including: Short-term lease | 1,295,863.18 | |
| Low-value asset lease | ||
| Adjusted minimum lease payments of major operating leases at January 1, 2021 | 13,578,156.41 | 3,189,784.64 |
| Weighted average of incremental borrowing rates | 4.75% | 4.75% |
| Balance of lease liabilities on January 1, 2021 | 12,852,715.53 | 3,161,008.25 |
| Including: Lease liabilities due within one year | 4,762,895.86 | 1,302,197.21 |
2. Changes of accounting estimates
There were no changes of accounting estimates within the reporting period.
VII. Description of Changes in the Scope of Consolidated Statements Compared with theFinancial Report of Last Year
√ Applicable □ Not applicable
The Company invested and founded C&S (Jiangsu) Paper Co., Ltd. on February 25, 2021, with a registeredcapital of RMB200 million. C&S Paper holds 100% of its equity. C&S (Jiangsu) Paper Co., Ltd. was incorporatedinto the scope of consolidated statements from February 2021. Currently, C&S (Jiangsu) Paper has startedoperating activities.On May 19, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and YunnanJiaqu Trading Co., Ltd. jointly invested and established Yunnan Dolemi Trading Co., Ltd., with a registered capitalof RMB4 million. Dolemi Sanitary Products holds 60% of the shares while Yunnan Jiaqu holds 40% of the shares.The Company has incorporated Yunnan Dolemi Trading Co., Ltd. into the scope of its consolidated statementssince May 2021. Yunnan Dolemi Trading Co., Ltd. was dissolved and canceled on October 19, 2021, and theCompany no longer incorporated it into the scope of consolidated statements from the date of cancellation.On May 20, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and LuzhouLongmatan District Jisheng Trading Co., Ltd. jointly invested and established Luzhou Dolemi Sanitary ProductsCo., Ltd., with a registered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares whileJisheng Trading holds 40% of the shares. The Company has incorporated Luzhou Dolemi Sanitary Products Co.,Ltd. into the scope of its consolidated statements since May 2021. Currently, Luzhou Dolemi has started operatingactivities.On June 08, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and SichuanZhong’en Liancheng Technology Co., Ltd. jointly invested and established Mianyang Dolemi Sanitary ProductsCo., Ltd., with a registered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares whileZhong’en Liancheng holds 40% of the shares. The Company has incorporated Mianyang Dolemi Sanitary
Products Co., Ltd. into the scope of its consolidated statements since June 2021. Currently, Mianyang Dolemi hasstarted operating activities.On July 12, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and HenanDuoxian Trading Co., Ltd. jointly invested and established Zhengzhou Dolemi Sanitary Products Co., Ltd., with aregistered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares while Duoxian Tradingholds 40% of the shares. The Company has incorporated Zhengzhou Dolemi Sanitary Products Co., Ltd. into thescope of its consolidated statements since July 2021. Currently, Zhengzhou Dolemi has not started operatingactivities.On July 14, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and DazhouJiatai Trading Co., Ltd. jointly invested and established Dazhou Dolemi Sanitary Products Co., Ltd., with aregistered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares while Jiatai Tradingholds 40% of the shares. The Company has incorporated Dazhou Dolemi Sanitary Products Co., Ltd. into thescope of its consolidated statements since July 2021. Currently, Dazhou Dolemi has started operating activities.On August 6, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and GuizhouFangsheng Trading Co., Ltd. jointly invested and established Guiyang Dolemi Sanitary Products Co., Ltd., with aregistered capital of RMB2 million. Dolemi Sanitary Products holds 60% of the shares while Guizhou FangshengTrading holds 40% of the shares. The Company has incorporated Guiyang Dolemi Sanitary Products Co., Ltd. intothe scope of its consolidated statements since August 2021. Currently, Guiyang Dolemi has started operatingactivities.On August 18, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, andZhanjiang Wei’s Trading Co., Ltd. jointly invested and established Zhanjiang Dolemi Sanitary Products Co., Ltd.,with a registered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares while ZhanjiangWei’s Trading holds 40% of the shares. The Company has incorporated Zhanjiang Dolemi Sanitary Products Co.,Ltd. into the scope of its consolidated statements since August 2021. Currently, Zhanjiang Dolemi has not startedoperating activities.On September 01, 2021, the Company and Bloomage Biotechnology Corporation Limited jointly invested andestablished Beijing Bloomage Jierou Biotechnology Co., Ltd., with a registered capital of RMB10 million. TheCompany holds 51% of the shares while Bloomage Biotechnology holds 49% of the shares. The Company hasincorporated Beijing Bloomage Jierou Biotechnology Co., Ltd. into the scope of its consolidated statements sinceSeptember 2021. Currently, Bloomage Jierou has started operating activities.On September 02, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, andXi’an Boyu Hengchang Trading Co., Ltd. jointly invested and established Xi’an Dolemi Sanitary Products Co.,Ltd., with a registered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares while BoyuHengchang Trading holds 40% of the shares. The Company has incorporated Xi’an Dolemi Sanitary Products Co.,Ltd. into the scope of its consolidated statements since September 2021. Currently, Xi’an Dolemi has not startedoperating activities.
VIII. Engagement and Dismissal of Accounting Firm
Accounting firm engaged
| Name of the domestic accounting firm | Mazars Certified Public Accountants (LLP) |
| Remuneration for the domestic accounting firm (RMB 10,000) | 156 |
| Consecutive years of auditing service provided by the domestic accounting firm | 3 |
| Name of domestic certified public accountants | Wang Bing, Pan Guiquan |
| Consecutive years of auditing service provided by domestic certified public accountants | 3 |
Whether the accounting firm was changed in the reporting period
□ Yes √ No
Appointment of accounting firm, financial advisor or sponsor for internal control audit
□ Applicable √ Not applicable
IX. The Company Facing Delisting after the Disclosure of the Annual Report
□ Applicable √ Not applicable
X. Matters relating to Bankruptcy and Restructuring
□ Applicable √ Not applicable
No bankruptcy and restructuring-related matters of the Company happened during the reporting period.XI. Material Litigations and Arbitrations
□ Applicable √ Not applicable
There were no material litigations or arbitrations during the reporting period. Other litigations of the Company areas follows:
| Basic information of the litigation (arbitration) | Amount involved (RMB 10,000) | Whether projected liabilities were incurred | Litigation (arbitration) progress | Hearing results and influences of the litigation (arbitration) | Execution of judgment of the litigation (arbitration) |
| Zhongshan Trading v. Shenzhen Yongxinghua Trading Co., Ltd., Feng, & Liang over sales contract dispute | 660.37 | No | Both the first instance and the second instance ruled that Zhongshan Trading won the case. | The verdict of second instance came into force. Zhongshan Trading has applied for execution. | In execution |
| Zhongshan Trading v. Guangzhou Yingjing Trade Co., Ltd. over sales contract dispute | 31.36 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict of first instance came into force. Zhongshan Trading has applied for execution. | The first round of execution ended. No properties have been recovered. |
| Zhongshan Trading v. Shanghai Tongli Trading Co., Ltd. and eight natural person defendants including Liu over sales contract dispute | 2,932.01 | No | Both the first instance and the second instance ruled that Zhongshan Trading won the case. | The verdict of second instance came into force. Zhongshan Trading has applied for execution. | In execution |
| Yin v. C&S Paper over the right to health dispute | 30.25 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance ruled that C&S won the case. The second instance sent the case back to the first instance court for a retrial. The first instance retrial has made a verdict. C&S has filed an appeal. | The second instance accepted the appeal; pending trial and judgment. | Not applicable |
| Sichuan C&S v. Xi’an Minsheng Department Store Management Co., Ltd. over contract dispute | 5.65 | No | The case was mediated and closed in the first instance. | Xi’an Minsheng has not fulfilled the repayment obligation in line with the paper of civil mediation. Sichuan C&S has applied for legal enforcement. | The first round of enforcement ended; RMB15,000 were recovered |
| Zhongshan Trading v. Guangzhou Jv Se Mai Ke Internet Service Co., Ltd. over sales contract dispute | 28.55 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict came into force. Zhongshan Trading has applied for execution. | First round of execution ended. No fund was recovered. |
| Xiaogan C&S v. Wuhan Xincheng Tongda Trading Co., Ltd. over sales contract dispute | 525.16 | No | The case was mediated and closed in the first instance (with a mediation amount of RMB4.4961 million). | The counterparty has not fulfilled obligation in line with the paper of civil mediation; Xiaogan C&S has applied for legal enforcement.. | In execution |
| Yunfu C&S v. Yu | 31.08 | No | The first instance has | The verdict came into force. | In execution |
| over sales contract dispute | ruled in favor of the company. | Yunfu C&S has applied for execution. | |||
| Zhongshan Trading v. Hefei Suning Fresh Food Supermarket Procurement Co., Ltd. over right to claims of bills | 475.27 | No | The first instance has accepted the case; pending trial and judgment | The first instance has accepted the case; pending trial and judgment | Not applicable |
| Chongqing Xianshida Human Resources Management Co., Ltd. v. C&S Paper over service contract dispute | 30 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance is being heard; pending judgment | The first instance is being heard; pending judgment | Not applicable |
| Yan v. Yunfu C&S over labor arbitration distribute | 4.85 | No | Labor arbitration has made a ruling | Main arbitration claims of the counterparty were rejected; the counterparty did not file for lawsuit, so execution has been completed. | Execution completed |
| Qiu v. Yunfu C&S over labor arbitration distribute | 16.53 | No | Labor arbitration has made a ruling | Main arbitration claims of the counterparty were rejected; the counterparty did not file for lawsuit, so execution has been completed. | Execution completed |
| Tangshan C&S v. Huangshan Langshuo Hotel Management Co., Ltd. over arrear dispute | 7.97 | No | The first instance supported all the claims by Tangshan C&S. | Tangshan C&S will apply for legal enforcement after the first instance verdict comes into effect. | Not applicable |
| Tangshan C&S v. Lijiang Yile Hotel Management Co., Ltd. over arrear dispute | 3.1 | No | The first instance has accepted the case; pending trial and judgment | The first instance has accepted the case; pending trial and judgment | Not applicable |
| Fan v. Yunfu C&S over labor arbitration distribute | 17.36 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to | Labor arbitration has accepted the case; pending hearing | Labor arbitration has accepted the case; pending hearing and judgment | Not applicable |
| the verdict.) | |||||
| Zhang v. Jiangmen C&S over labor arbitration distribute | 84.92 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance has made a ruling, with all claims against the company being dismissed. | The counterparty appealed; pending trial and judgment | Not applicable |
| Lu v. Jiangmen C&S over labor arbitration distribute | 62.71 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance has made a ruling, with all claims against the company being dismissed. | The counterparty appealed; pending trial and judgment | Not applicable |
| Tan v. Jiangmen C&S over labor arbitration distribute | 121.39 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance has made a ruling, with all claims against the company being dismissed. | The counterparty appealed; pending trial and judgment | Not applicable |
XII. Penalties and Rectifications
□ Applicable √ Not applicable
No penalties and rectifications of the Company occurred during the reporting period.
XIII. Integrity Records of the Company and its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XIV. Material Related Party Transactions
1. Related party transactions relating to daily operations
√ Applicable □ Not applicable
| Party of related party transaction | Related relationship | Type of related party transaction | Content of related party transaction | Pricing rules of related party transaction | Price of related party transactions | Amount of related party transaction (RMB10,000) | Proportion in the amount of similar transactions | Approved transaction limit (RMB10,000) | Whether to outstrip the approved limit | Settlement of related party transaction | Available market prices for similar transactions | Date of disclosure | Index of disclosure |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 294.81 | 22.05% | 294.81 | No | Transfer settlement | Market fair price | December 06, 2019 | 2019-93 |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 33.36 | 2.50% | 33.36 | No | Transfer settlement | Market fair price | October 30, 2020 | 2020-82 |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 1.3 | 0.10% | Yes | Transfer settlement | Market fair price | |||
| Pengzhou Enjoying Life Trading Co., Ltd. | A company in which the son of the Company’s Vice President Yue Yong holds 50% equity and serves as a supervisor | Daily operation transaction | Sale of goods | Market fair price | Market fair price | 237.22 | 0.03% | 150 | Yes | Transfer settlement | Market fair price | December 16, 2020 | 2020-99 |
| Sichuan West Enjoying Life Trading Co., Ltd. | A company in which the son of the | Daily operation transaction | Sale of goods and promotion fee | Market fair price | Market fair price | 56.53 | 0.02% | 50 | Yes | Transfer settlement | Market fair price | December 16, 2020 | 2020-99 |
| Company’s Vice President Yue Yong holds 50% equity and serves as a supervisor | |||||||||||||
| Chongqing Qinyue Trading Co., Ltd. | A company in which the spouse of the brother of the Company’s Vice President Yue Yong holds 99% equity | Daily operation transaction | Sale of goods | Market fair price | Market fair price | 0.00% | 100 | No | Transfer settlement | Market fair price | December 16, 2020 | 2020-99 | |
| Total | -- | -- | 623.22 | -- | 628.17 | -- | -- | -- | -- | -- | |||
| Details of returns of large sales | Not applicable | ||||||||||||
| Where the total amount of daily related-party transactions occurred in the current period is estimated by category, actual performance during the reporting period (if any) | Among the excessive amounts of related party transactions in the reporting period, RMB13,000 is for renting properties from the related party, RMB872,200 is for the sales of goods to the related party, and RMB65,300 is for the related party’s provision of services to the Company and the Company’s sales of goods to the related party. They fall within the authority of the Chairman of the Company and can be implemented without the approval of the Board of Directors. | ||||||||||||
| Reason(s) for a large difference between the transaction price and the market reference price (if applicable) | Exercise at fair price | ||||||||||||
2. Related party transactions relating to acquisition and sale of assets or equity
□ Applicable √ Not applicable
During the reporting period, there was no related party transaction relating to acquisition and sale of assets or equity.
3. Related party transactions relating to joint outbound investment
□ Applicable √ Not applicable
During the reporting period, there was no related party transaction relating to joint outbound investment.
4. Related party transactions relating to creditor’s rights and debts
□ Applicable √ Not applicable
During the reporting period, there was no related party transaction relating to creditor’s rights and debts.
5. Transactions with related party financial companies
□ Applicable √ Not applicable
The Company did not have deposit, loan, credit or other financial business transactions with financial companies that have relatedrelationship and the associated related parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable √ Not applicable
Financial companies controlled by the Company did not have deposit, loan, credit or other financial business transactions with relatedparties.
7. Other significant related party transactions
□ Applicable √ Not applicable
During the reporting period, there were no other significant related party transactions.
XV. Significant Contracts and Their Performance
1. Custody, contracting and leasing matters
(1) Custody
□ Applicable √ Not applicable
During the reporting period, there was no custody.
(2) Contracting
□ Applicable √ Not applicable
During the reporting period, there was no contracting.
(3) Leasing
√ Applicable □ Not applicable
Description of leasing matters
On December 5, 2019, the Company convened the 19th meeting of the fourth session of the Board of Directorsand the 16th meeting of the fourth session of the Board of Supervisors, on which the Proposal on Daily RelatedParty Transactions in 2021 was reviewed and approved. Due to the needs of operation and business, the Board ofDirectors of the Company agreed that the Company and its wholly-owned subsidiary, Zhongshan ZhongshunTrading Co., Ltd., leased the real estate jointly owned by Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. DengGuanjie, the actual controllers of the Company. The lease term is from January 1, 2020 to December 31, 2021, andthe total rent involved is RMB5,896,200. During the deliberation of this proposal, the Company’s three relateddirectors, Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew from voting, while theremaining six attending directors unanimously approved this related party transaction. The three independentdirectors of the Company respectively issued Prior Approval Opinions and Opinions of Independent Directors onthe proposal, agreeing to submit the proposal to the Board of Directors for deliberation and agreeing to the relatedparty transaction.On October 29, 2020, the Company convened the 28th meeting of the fourth session of the Board of Directors andthe 22nd meeting of the fourth session of the Board of Supervisors, on which the Proposal on Adding toRelated-Party Leasing Transactions was reviewed and approved. The Board of Directors of the Company agreedthat the Company’s wholly-owned subsidiary, C&S (Yunfu) Paper Co., Ltd., leased the real estate jointly ownedby the actual controllers of the Company Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie to beused as its R&D center. The lease term is from November 1, 2020 to December 31, 2021, and the total rentinvolved is RMB389,300. During the deliberation of this proposal, the Company’s three related directors, Mr.Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew from voting, while the remaining sixattending directors unanimously approved this related party transaction. The three independent directors of theCompany respectively issued Prior Approval Opinions and Opinions of Independent Directors on the proposal,agreeing to submit the proposal to the Board of Directors for deliberation and agreeing to the related partytransaction.The Company’s holding subsidiary, Dolemi Sanitary Products Co., Ltd., leased the real estate jointly owned byactual controllers of the Company Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie to be used asresidence. The lease term is from December 1, 2020 to December 31, 2021, and the total rent involved isRMB14,100. The amount of this related party transaction falls within the approval authority of the Company’sChairman and has been approved by the Chairman.Projects whose profits or losses brought to the Company reached more than 10% of the total profits of the Company during thereporting period
□ Applicable √ Not applicable
During the reporting period, there were no leasing projects whose profits or losses brought to the Company reached more than 10%
of the total profits of the Company during the reporting period.
2. Material guarantee
√ Applicable □ Not applicable
Unit: RMB10,000
| External guarantee of the Company and subsidiaries (excluding guarantee for subsidiaries) | ||||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Guarantee of the Company for subsidiaries | ||||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Zhongshan Trading | December 15, 2020 | 15,000 | October 18, 2021 | 2,858.85 | Joint and several liability guarantee | None | None | 2021.10.18-2024.9.7 | No | No |
| Zhongshan Trading | December 15, 2020 | 13,600 | March 02, 2021 | 11,696.66 | Joint and several liability guarantee | None | None | 2021.3.2-2026.3.1 | No | No |
| Zhongshan Trading | December 05, 2019 | 25,000 | December 15, 2020 | 0 | Joint and several liability guarantee | None | None | 2020.12.15-2024.12.9 | No | No |
| Zhongshan Trading | December 15, 2020 | 15,000 | September 24, 2021 | 4,609.26 | Joint and several liability guarantee | None | None | 2021.9.24-2024.7.7 | No | No |
| Zhongshan Trading | December 15, 2020 | 50,000 | August 21, 2021 | 2,270.46 | Joint and several liability | None | None | 2021.8.21-2025.5.11 | No | No |
| guarantee | ||||||||||
| Zhongshan Trading | December 15, 2020 | 16,000 | September 15, 2021 | 500 | Joint and several liability guarantee | None | None | 2021.9.15-2024.12.31 | No | No |
| Jiangmen C&S | December 15, 2020 | 12,000 | October 26, 2021 | 3,043.37 | Joint and several liability guarantee | None | None | 2021.10.26-2024.9.12 | No | No |
| Jiangmen C&S | December 05, 2019 | 10,000 | November 16, 2020 | 3,954.7 | Joint and several liability guarantee | None | None | 2020.11.26-2023.11.25 | No | No |
| Jiangmen C&S | December 15, 2020 | 15,000 | May 13, 2021 | 0 | Joint and several liability guarantee | None | None | 2021.5.13-2024.3.30 | No | No |
| Jiangmen C&S | December 05, 2019 | 5,000 | December 23, 2020 | 1,258.97 | Joint and several liability guarantee | None | None | 2020.12.23-2025.12.23 | No | No |
| Yunfu C&S | December 05, 2019 | 8,000 | April 14, 2020 | 0 | Joint and several liability guarantee | None | None | 2020.4.14-2028.4.14 | No | No |
| Yunfu C&S | December 05, 2019 | 5,000 | November 20, 2020 | 800 | Joint and several liability guarantee | None | None | 2020.11.20-2023.12.31 | No | No |
| Yunfu C&S | December 15, 2020 | 20,000 | October 26, 2021 | 2,906.39 | Joint and several liability guarantee | None | None | 2021.10.26-2024.9.12 | No | No |
| Yunfu C&S | December 15, 2020 | 15,000 | May 13, 2021 | 0 | Joint and several liability guarantee | None | None | 2021.5.13-2024.3.30 | No | No |
| Yunfu C&S | December 15, 2020 | 5,000 | September 27, 2021 | 1,399.33 | Joint and several liability guarantee | None | None | 2021.9.27-2023.12.16 | No | No |
| Hubei C&S | December 15, 2020 | 10,000 | December 03, 2021 | 0 | Joint and several liability guarantee | None | None | 2021.12.3-2026.9.29 | No | No |
| Zhongshan Trading, Hubei C&S, and Macao C&S | December 15, 2020 | 9,560.7 | June 01, 2021 | 1,395.56 | Joint and several liability guarantee | None | None | 2021.6.1-2023.4.22 | No | No |
| Jiangmen C&S, Yunfu C&S, Hubei C&S | December 19, 2018 | 25,000 | January 08, 2019 | 0 | Joint and several liability guarantee | None | None | 2019.1.8-2022.1.8 | No | No |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 15, 2020 | 31,869 | November 04, 2021 | 4,802.72 | Joint and several liability guarantee | None | None | 2021.11.4-2025.7.31 | No | No |
| C&S Hong Kong, Zhong Shun International | December 15, 2020 | 16,593.22 | September 08, 2021 | 0 | Joint and several liability guarantee | None | None | 2021.9.8-2023.9.8 | No | No |
| C&S Hong Kong, Macao C&S | December 15, 2020 | 32,696 | March 17, 2021 | 1,375.12 | Joint and several liability guarantee | None | None | 2021.3.17-2025.12.31 | No | No |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 05, 2019 | 40,473.63 | February 12, 2020 | 6,612.2 | Joint and several liability guarantee | None | None | 2020.2.12-2022.2.12 | No | No |
| C&S Hong Kong, Macao | December 05, 2019 | 12,747.6 | February 25, 2020 | 0 | Joint and several liability | None | None | 2020.2.25-2022.2.25 | No | No |
| C&S | guarantee | |||||||||
| C&S Hong Kong, Macao C&S | December 15, 2020 | 6,373.8 | December 03, 2021 | 0 | Joint and several liability guarantee | None | None | 2021.12.3-2025.9.24 | No | No |
| C&S Hong Kong, Macao C&S | December 05, 2019 | 15,297.12 | March 27, 2020 | 1,300.26 | Joint and several liability guarantee | None | None | 2020.3.27-2023.2.19 | No | No |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 15, 2017 | 17,655.84 | September 28, 2018 | 0 | Joint and several liability guarantee | None | None | 2018.9.28-2022.8.31 | No | No |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 05, 2019 | 19,121.4 | January 30, 2020 | 710.29 | Joint and several liability guarantee | None | None | 2020.1.30-2023.1.30 | No | No |
| Macao C&S | December 15, 2017 | 7,011.18 | March 23, 2018 | 0 | Joint and several liability guarantee | None | None | 2018.3.23-2022.9.23 | No | No |
| Macao C&S | December 15, 2017 | 7,000 | August 15, 2018 | 0 | Joint and several liability guarantee | None | None | 2018.8.15-2025.8.15 | No | No |
| Macao C&S | December 15, 2020 | 19,121.4 | November 12, 2021 | 6,392.92 | Joint and several liability guarantee | None | None | 2021.11.12-2024.10.20 | No | No |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 05, 2019 | 22,308.3 | September 01, 2020 | 2,244.48 | Joint and several liability guarantee | None | None | 2020.9.1-2022.7.9 | No | No |
| Total approved amount of guarantee for subsidiaries during the reporting period (B1) | 302,814.12 | Total actual amount of guarantee for subsidiaries during the reporting period (B2) | 43,250.64 | ||||||||
| Total approved amount of guarantee for subsidiaries at the end of the reporting period (B3) | 522,429.19 | Total actual guarantee balance to subsidiaries at the end of the reporting period (B4) | 60,131.54 | ||||||||
| Guarantee of subsidiaries to subsidiaries | |||||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Whether it has been completed | Whether it is related party guarantee | |
| Total amount of the Company’s guarantee (the sum of the first three items) | |||||||||||
| Total approved amount of guarantee during the reporting period (A1 + B1 + C1) | 302,814.12 | Total actual amount of guarantee during the reporting period (A2 + B2 + C2) | 43,250.64 | ||||||||
| Total approved amount of guarantee at the end of the reporting period (A3 + B3 + C3) | 522,429.19 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 60,131.54 | ||||||||
| Proportion of the total actual amount of guarantee (A4 + B4 + C4) in the net assets of the Company | 12.26% | ||||||||||
| Wherein: | |||||||||||
| Balance of guarantee for shareholders, actual controllers and their related parties (D) | 0 | ||||||||||
| Balance of debt guarantee provided directly or indirectly for objects whose asset-liability ratio exceeds 70% (E) | 23,330.79 | ||||||||||
| Amount of guarantees in excess of 50% of net assets (F) | 0 | ||||||||||
| Total amount of the above three guarantees (D + E + F) | 23,330.79 | ||||||||||
| Description of situations that the guarantee liability has occurred or there is evidence showing that the Company may be jointly and severally | None | ||||||||||
| liable for undue guarantee contracts during the reporting period (if any) | |
| Description of providing external guarantee in violation of prescribed procedures (if any) | None |
Detailed description on the guarantees with different types: None
3. Entrusting others to manage cash assets
(1) Entrusted wealth management
√ Applicable □ Not applicable
Overview of entrusted wealth management during the reporting period
Unit: RMB10,000
| Specific type | Source of entrusted wealth management funds | Incurred amount of entrusted wealth management | Undue balance | Amount overdue but not recovered | Amount overdue but not recovered with impairment having been accrued |
| Wealth management product of securities company | Self-owned fund | 9,500 | 1,000 | 0 | 0 |
| Wealth management product of bank | Self-owned fund | 1,000 | 0 | 0 | 0 |
| Total | 10,500 | 1,000 | 0 | 0 | |
Explanation of high-risk entrusted wealth management with large individual amount or low safety and poor liquidity
□ Applicable √ Not applicable
Entrusted wealth management is expected to fail to recover the principal or there are other circumstances that may lead to impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
There were no entrusted loans during the reporting period.
4. Other significant contracts
□ Applicable √ Not applicable
There were no other significant contracts during the reporting period.
XVI. Other Significant Events
√ Applicable □ Not applicable
1. Reelection of directors and supervisors
The Company convened the 30th meeting of the fourth session of the Board of Directors and the 24th meeting ofthe fourth session of the Board of Supervisors on January 5, 2021 and the 2021 First Extraordinary GeneralMeeting on January 21, 2021, which elected non-independent directors and independent directors of the fifthsession of the Board of Directors and non-employee-representative supervisors. On January 12, 2021, theCompany convened the employee representative meeting and elected employee representative supervisors. Fordetails, please refer to the relevant announcement released by the Company on www.cninfo.com.cn.
2. New 400,000-ton high-grade household paper project
The Company convened the 31st meeting of the fourth session of the Board of Directors on January 13, 2021,which reviewed and adopted the Proposal on Building a New 400,000-ton High-grade Household Paper Project.The new project aims to promote the Company to further expand its production capacity, meet the demands forfuture sales growth in East China market, and create new profit growth points for the Company. With a totalprojected investment of RMB2.55 billion and a planned capacity of 400,000 tons, the project will be implementedin phases. The first phase is planned to have an investment of RMB600 million and an output of 100,000 tons ofhigh grade household paper. For details, please refer to the relevant announcement released by the Company onwww.cninfo.com.cn.
3. Share repurchase
On January 5, 2021, the Company held the 30th meeting of the fourth session of the Board of Directors whichreviewed and passed the Proposal on Share Repurchase of the Company. The Company plans to repurchase sharesof the Company via centralized bidding transaction, and the shares to be repurchased will be used for equityincentives or employee stock ownership plans. The share repurchase expired on January 5, 2022. The Companyrepurchased a total of 24,863,087 shares, accounting for 1.8942% of its total share capital. The highest and lowesttransaction price was RMB34.50/share and RMB16.48/share, respectively, and the total transaction amount wasRMB 661,249,972.28 (excluding transaction fee). For details, please refer to the relevant announcement releasedby the Company on www.cninfo.com.cn.
4. Phase III Employee Stock Ownership Plan
The Company held the 5th meeting of the fifth session of the Board of Directors and the Fourth ExtraordinaryGeneral Meeting on May 21 and June 7, 2021, respectively, which considered and approved the Proposal on thePhase III Employee Stock Ownership Plan (Draft) and Its Summary and other relevant proposals. As such, theimplementation of the Phase III Employee Ownership Plan was approved.On November 30, 2021, the Company convened the 12th meeting of the fifth Session of the Board of Directorsand the 7th meeting of the fifth Session of the Board of Supervisors, which reviewed and approved the Proposalon Terminating the Phase III Employee Stock Ownership Plan. Ever since review procedures for the Phase III planwere complement, the management of the Company has been actively promoting its implementation and hascommunicated with employee representatives many times regarding its specific implementation. Employeesparticipating in this Plan fully recognize the original intention of the Plan. The Company has held internalcommunication meetings and actively communicated with financial institutions to carry out financing work.However, considering changes in relevant financial policies plus market reasons, it is difficult to continue pushingforward the Plan. To better safeguard the interests of the Company, shareholders and employees, the Company hasdecided to terminate the Phase III Employee Stock Ownership Plan upon careful consideration in accordance with
relevant regulations. For details, please refer to the relevant announcement released by the Company onwww.cninfo.com.cn.
5. Proposal of the actual controller for employees to increase shareholding of the CompanyOn May 9, 2021, the Company received the Letter on Proposing All Employees to Increase Shareholding of theCompany from the director and actual controller of the Company Mr. Deng Yingzhong. Based on his confidencein the Company’s sustained development in the future, Mr. Deng called on employees of the Company andsubsidiaries to actively buy in stock of the Company. He also promised: “For all employees who purchase C&SPaper stocks (no less than 1,000 shares) between May 10 and May 31, 2021 and hold them continuously untilMay 30, 2022 while still serving in the Company by then, any losses incurred from the aforesaid stocks will befully compensated by Mr. Deng Yingzhong while any profits generated will entirely belong to the employee.”The commitment hereof is not due yet as of the end of the reporting period. For details, please refer to the relevantannouncement released by the Company on www.cninfo.com.cn.XVII. Significant Events of Subsidiaries of the Company
√ Applicable □ Not applicable
1. High-tech enterprise certification
The Certificate of High-tech Enterprise of C&S (Yunfu) Paper Co., Ltd. and C&S (Sichuan) Paper Co., Ltd., twowholly-owned subsidiaries of the Company, was re-certified upon expiration. Within three years after certificationand archival, the two subsidiaries can enjoy a preferential rate of corporate income tax at 15%.
2. Changes of industrial and commercial registration
(1) C&S (Sichuan) Paper Co., Ltd., C&S (Yunfu) Paper Co., Ltd., Jiangmen Zhongshun Paper Co., Ltd., C&S(Hubei) Paper Co., Ltd. and C&S (Yunfu) Trading Co., Ltd. expanded their scope of business, and have completedthe change registration with the industrial and commercial department and collected the new business licenses.
(2) The Company’s wholly-owned subsidiary C&S (Yunfu) Trading Co., Ltd. was changed to “Yunfu HengtaiTrading Co., Ltd.”.
3. Newly established/joint stock companies
(1) The Company established a wholly-owned subsidiary, C&S (Jiangsu) Paper Co., Ltd., as the entity toimplement the 400,000-ton high-grade household paper project.
(2) Out of business development needs, the Company invested and established 8 joint-stock companies in 2021:
Luzhou Dolemi Sanitary Products Co., Ltd. (the Company subscribed RMB900,000 through its wholly-ownedsubsidiary Dolemi Sanitary Products Co., Ltd. and holds 60% of the shares); Mianyang Dolemi Sanitary ProductsCo., Ltd. (the Company subscribed RMB900,000 through its wholly-owned subsidiary Dolemi Sanitary ProductsCo., Ltd. and holds 60% of the shares); Dazhou Dolemi Sanitary Products Co., Ltd. (the Company subscribedRMB900,000 through its wholly-owned subsidiary Dolemi Sanitary Products Co., Ltd. and holds 60% of theshares); Guiyang Dolemi Sanitary Products Co., Ltd. (the Company subscribed RMB1.2 million through itswholly-owned subsidiary Dolemi Sanitary Products Co., Ltd. and holds 60% of the shares); Zhengzhou DolemiSanitary Products Co., Ltd. (the Company subscribed RMB600,000 through its wholly-owned subsidiary DolemiSanitary Products Co., Ltd. and holds 60% of the shares); Xi’an Dolemi Sanitary Products Co., Ltd. (the Company
subscribed RMB600,000 through its wholly-owned subsidiary Dolemi Sanitary Products Co., Ltd. and holds 60%of the shares); Zhanjiang Dolemi Sanitary Products Co., Ltd. (the Company subscribed RMB600,000 through itswholly-owned subsidiary Dolemi Sanitary Products Co., Ltd. and holds 60% of the shares); Beijing BloomageJierou Biotechnology Co., Ltd. (the Company subscribed RMB5.1 million and holds 51% of the shares)
Section VII Changes in Shareholding and Information of ShareholdersI. Changes in Share Capital
1. Changes in shares
Unit: share
| Before change | Increase/decrease (+, -) of this change | After change | |||||||
| Number | Percentage | New shares issued | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | Number | Percentage | |
| I. Shares subject to selling restrictions | 36,858,323 | 2.81% | 236,250 | -9,533,973 | -9,297,723 | 27,560,600 | 2.10% | ||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic shareholders | 34,906,289 | 2.66% | 11,250 | -7,952,539 | -7,941,289 | 26,965,000 | 2.05% | ||
| Including: Shares held by domestic legal persons | |||||||||
| Shares held by domestic natural persons | 34,906,289 | 2.66% | 11,250 | -7,952,539 | -7,941,289 | 26,965,000 | 2.05% | ||
| 4. Shares held by foreign shareholders | 1,952,034 | 0.15% | 225,000 | -1,581,434 | -1,356,434 | 595,600 | 0.05% | ||
| Including: Shares held by foreign legal persons | |||||||||
| Shares held by foreign natural persons | 1,952,034 | 0.15% | 225,000 | -1,581,434 | -1,356,434 | 595,600 | 0.05% | ||
| II. Shares without selling restrictions | 1,274,840,644 | 97.19% | 2,888,811 | 7,300,778 | 10,189,589 | 1,285,030,233 | 97.90% | ||
| 1. RMB-denominated ordinary shares | 1,274,840,644 | 97.19% | 2,888,811 | 7,300,778 | 10,189,589 | 1,285,030,233 | 97.90% | ||
| 2. Domestic listed foreign shares | |||||||||
| 3. Overseas listed foreign | |||||||||
| shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 1,311,698,967 | 100.00% | 3,125,061 | -2,233,195 | 891,866 | 1,312,590,833 | 100.00% |
Explanation on changes in shares
√ Applicable □ Not applicable
1. During January 1, 2021 and February 28, 2021, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 461,478 shares in the first exercisable period. As a result, the Company’s total share capital increased by461,478 shares.
2. During the first unlock period for restricted shares awarded in the first grant under the 2018 Stock Option andRestricted Stock Incentive Plan, 24 incentive recipients were unable to unlock the shares since they left theCompany or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only unlock shares proportioned to theirmark. As a result, the Company had to repurchase and cancel a total of 211,890 restricted shares that had beengranted but not unlocked. The deregistration procedures for the aforementioned restricted shares had beencompleted at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited as at March3, 2021. As a result, the Company’s total share capital decreased by 211,890 shares.
3. During the second unlock period for restricted shares awarded in the first grant under the 2018 Stock Optionand Restricted Stock Incentive Plan, 96 incentive recipients were unable to unlock the shares since they left theCompany or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only unlock shares proportioned to theirmark. As a result, the Company had to repurchase and cancel a total of 2,021,305 restricted shares that had beengranted but not unlocked. The repurchase and deregistration procedures for the aforementioned restricted shareshad been completed at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited asat October 27, 2021. As a result, the Company’s total share capital decreased by 2,021,305 shares.
4. During June 30, 2021 and December 31, 2021, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 2,663,583 shares in the second exercisable period. As a result, the Company’s total share capital increasedby 2,663,583 shares.
Approval of changes in shares
√ Applicable □ Not applicable
1. The Board of Directors’ disposition of the exercise matters for the first exercise period of restricted stockoptions awarded in the first grant and reserved stock options under the 2018 Stock Option and Restricted StockIncentive Plan had been authorized by the 2019 First Extraordinary General Meeting and reviewed and approvedby the 23rd meeting of the fourth session of the Board of Directors, the 19th meeting of the fourth session of theBoard of Supervisors, the 28th meeting of the fourth session of the Board of Directors, and the 22nd meeting ofthe fourth session of the Board of Supervisors.
2. The Board of Directors’ disposition of the repurchase and deregistration matters for the first unlocking ofreserved restricted shares under the 2018 Stock Option and Restricted Stock Incentive Plan had been authorized bythe 2019 First Extraordinary General Meeting and reviewed and approved by the 28th meeting of the fourthsession of the Board of Directors and 22nd meeting of the fourth session of the Board of Supervisors.
3. The Board of Directors’ disposition of the repurchase and deregistration matters for the second unlocking offirst-grant restricted shares under the 2018 Stock Option and Restricted Stock Incentive Plan had been authorized
by the 2019 First Extraordinary General Meeting and reviewed and approved by the 5th meeting of the fifthsession of the Board of Directors and 3rd meeting of the fifth session of the Board of Supervisors.
4. The Board of Directors’ disposition of the exercise matters for the second exercise period of restricted stockoptions awarded in the first grant and reserved stock options under the 2018 Stock Option and Restricted StockIncentive Plan had been authorized by the 2019 First Extraordinary General Meeting and reviewed and approvedby the 5th meeting of the fifth session of the Board of Directors, the 3rd meeting of the fifth session of the Boardof Supervisors, the 12th meeting of the fifth session of the Board of Directors, and the 7th meeting of the fifthsession of the Board of Supervisors.Transfer of title of changed shares
□ Applicable √ Not applicable
Impact of share changes on basic earnings per share and diluted earnings per share, net assets per share attributable to ordinaryshareholders of the Company, and other financial indicators in last year and the latest period
□ Applicable √ Not applicable
Other contents considered necessary by the Company or required to be disclosed by the securities regulatory authority
□ Applicable √ Not applicable
2. Changes in shares subject to selling restrictions
√ Applicable □ Not applicable
Unit: share
| Shareholder’s name | Number of shares subject to selling restrictions at the beginning of the period | Increase in shares subject to selling restrictions during the period | Number of shares released from selling restrictions during the period | Number of shares subject to selling restrictions at the end of the year | Reason for Selling restrictions | Date of release from selling restrictions |
| Deng Yingzhong | 5,064,608 | 5,064,608 | Lock-up shares of senior management | Long-term | ||
| Liu Peng | 45,975 | 45,975 | Lock-up shares of senior management; the increase in restricted shares is due to the proportional locking of shareholding increase. | Long-term | ||
| Deng Guanbiao | 3,718,105 | 3,718,105 | Lock-up shares of senior management | Long-term | ||
| Deng Guanjie | 900,730 | 900,730 | Lock-up shares of senior management | Long-term | ||
| Zhang Yang | 37,500 | 37,500 | Lock-up shares of senior management; the increase | Long-term |
| in restricted shares is due to the locking of shares proportional to the position of the senior management. | ||||||
| Yue Yong | 9,261,243 | 247,500 | 2,045,438 | 7,463,305 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of unlocked restricted shares proportional to the position of the senior management. | Long-term |
| Li Zhaojin | 8,100 | 8,100 | Lock-up shares of senior management; the increase in restricted shares is due to the proportional locking of shareholding increase. | Long-term | ||
| Deng Wenxi | 15,825 | 15,825 | Lock-up shares of senior management; the increase in restricted shares is due to the proportional locking of shareholding increase. | Long-term | ||
| Zhao Ming | 6,250 | 6,250 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares proportional to the position of the senior management. | Long-term | ||
| Lin Tiande | 212,141 | 212,141 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares proportional to the position of the senior management. | Long-term | ||
| Dong Ye | 119,794 | 45,000 | 42,000 | 122,794 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of unlocked restricted shares and | Long-term |
| exercised stock options proportional to the position of the senior management. | ||||||
| Chen Haiyuan | 12,675 | 12,675 | Lock-up shares of senior management; the increase in restricted shares is due to the proportional locking of shareholding increase. | Long-term | ||
| Zhang Gao | 32,000 | 32,000 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares proportional to the position of the supervisor. | Long-term | ||
| Li Youquan (resigned) | 33,300 | 11,100 | 44,400 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares upon resignation. | Release of selling restrictions in accordance with relevant regulations | |
| Zhou Qichao (resigned) | 497,754 | 123,682 | 374,072 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares upon resignation. | Release of selling restrictions in accordance with relevant regulations | |
| Ye Longfang (resigned) | 112,500 | 37,500 | 150,000 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shares upon resignation. | Release of selling restrictions in accordance with relevant regulations | |
| Dai Zhenji (resigned) | 265,034 | 225,000 | 62,534 | 427,500 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of exercised stock options proportional to the position of the senior management. | Release of selling restrictions in accordance with relevant regulations |
| Liu Jinfeng (resigned) | 1,579,475 | 243,000 | 446,563 | 1,375,912 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of unlocked restricted shares | Release of selling restrictions in accordance with relevant regulations |
| proportional to the position of the senior management. | ||||||
| Equity incentive recipients | 15,305,780 | 7,757,072 | 7,548,708 | In accordance with 2018 Stock Option and Restricted Stock Incentive Plan (Draft), the second unlocking was conducted for partial restricted stocks awarded in the first grant and partial reserved stocks in 2021; 30% of the shares were unlocked; 40% of the shares of the third phase were still locked. | Pursuant to 2018 Stock Option and Restricted Stock Incentive Plan (Draft) | |
| Total | 36,858,323 | 1,179,566 | 10,477,289 | 27,560,600 | -- | -- |
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preference shares) during the reporting period
□ Applicable √ Not applicable
2. Changes in total shares and shareholder structure as well as changes in asset and liability structure of theCompany
√ Applicable □ Not applicable
1. During January 1, 2021 and February 28, 2021, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 461,478 shares in the first exercisable period. As a result, the Company’s total share capital increased by461,478 shares.
2. During the first unlock period for restricted shares awarded in the first grant under the 2018 Stock Option andRestricted Stock Incentive Plan, 24 incentive recipients were unable to unlock the shares since they left theCompany or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only unlock shares proportioned to theirmark. As a result, the Company had to repurchase and cancel a total of 211,890 restricted shares that had beengranted but not unlocked. The deregistration procedures for the aforementioned restricted shares had beencompleted at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited as at March3, 2021. As a result, the Company’s total share capital decreased by 211,890 shares.
3. During the second unlock period for restricted shares awarded in the first grant under the 2018 Stock Optionand Restricted Stock Incentive Plan, 96 incentive recipients were unable to unlock the shares since they left the
Company or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only unlock shares proportioned to theirmark. As a result, the Company had to repurchase and cancel a total of 2,021,305 restricted shares that had beengranted but not unlocked. The repurchase and deregistration procedures for the aforementioned restricted shareshad been completed at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited asat October 27, 2021. As a result, the Company’s total share capital decreased by 2,021,305 shares.
4. During June 30, 2021 and December 31, 2021, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 2,663,583 shares in the second exercisable period. As a result, the Company’s total share capital increasedby 2,663,583 shares.
3. Internal employee shares
□ Applicable √ Not applicable
III. Information of Shareholders and Actual Controllers
1. Total number of shareholders
Unit: share
| Total number of ordinary shareholders as at the end of the reporting period | 151,879 | Total number of ordinary shareholders at the end of the month preceding the disclosure date of the annual report | 141,508 | Total number of preferred shareholders whose voting rights were resumed at the end of the reporting period (if any) (see Note VIII) | 0 | Total number of preferred shareholders whose voting rights were resumed at the end of the month preceding the disclosure date of the annual report (if any) (see Note VIII) | 0 | ||||||
| Shareholdings of shareholders with more than 5% or the top 10 shareholders | |||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Shares held at the end of the reporting period | Increase/decrease during the reporting period | Number of shares subject to selling restrictions | Number of shares without selling restrictions | Pledged, marked or frozen | ||||||
| Share status | Number | ||||||||||||
| Guangdong Zhongshun Paper Group Co., Ltd. | Domestic non-state-owned legal person | 28.62% | 375,655,958 | 375,655,958 | |||||||||
| Chung Shun Co. | Foreign legal | 20.30% | 266,504,789 | 266,504,789 | |||||||||
| person | ||||||||
| Hong Kong Securities Clearing Co., Ltd. | Foreign legal person | 4.58% | 60,108,758 | Share reduction | 60,108,758 | |||
| Ernest Partners LLC — Client funds | Foreign legal person | 0.79% | 10,402,100 | New | 10,402,100 | |||
| Yue Yong | Domestic natural person | 0.74% | 9,665,241 | Share reduction | 7,903,305 | 1,761,936 | ||
| # Lin Zuohua | Domestic natural person | 0.63% | 8,217,510 | New | 8,217,510 | |||
| Deng Yingzhong | Domestic natural person | 0.51% | 6,752,811 | 5,064,608 | 1,688,203 | |||
| # Zhongshan Xinda Investment Management Co., Ltd. | Domestic non-state-owned legal person | 0.47% | 6,123,636 | Share increase | 6,123,636 | |||
| Deng Guanbiao | Domestic natural person | 0.38% | 4,957,473 | 3,718,105 | 1,239,368 | |||
| Hua Life Insurance Co., Ltd. - Self-owned funds | Others | 0.36% | 4,692,263 | Share increase | 4,692,263 | |||
| Strategic investors or general legal persons becoming top ten shareholders due to private placement of new shares (if any) (see Note 3) | Not applicable | |||||||
| Description on the related relationship or parties acting-in-concert arrangements among the above shareholders | 1. Among the top ten shareholders mentioned above, Mr. Deng Yingzhong and Mr. Deng Guanbiao are among the actual controllers of the Company; Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by actual controllers of the Company, i.e. Mr. Deng Yingzhong, Deng Guanbiao and Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. Mr. Yue Yong is an incumbent senior manager of the Company. 2. Except for the above situation, it is unknown to the Company whether there is related party relationship among other shareholders, or whether there is acting-in-concert among other shareholders as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders’ Shareholding of Listed Companies. | |||||||
| Description on entrusting/being entrusted with voting rights and waver of voting rights by the aforementioned shareholders: | Not applicable | |||||||
| Description on special repurchase | There is a special repurchase account “C&S Paper Special Repurchase Securities Account” | |||||||
| account among top 10 shareholders (if any) (see note 10) | among the top 10 shareholders. As of the end of the reporting period, this repurchase account held 26,758,987 shares, with a shareholding ratio of 2.04%. Pursuant to relevant regulations, it is not included in the list of top 10 shareholders. | ||
| Shareholdings of top 10 shareholders not subject to selling restrictions | |||
| Name of shareholder | Number of shares held not subject to selling restrictions | Type of shares | |
| Type of shares | Number | ||
| Guangdong Zhongshun Paper Group Co., Ltd. | 375,655,958 | RMB-denominated ordinary shares | 375,655,958 |
| Chung Shun Co. | 266,504,789 | RMB-denominated ordinary shares | 266,504,789 |
| Hong Kong Securities Clearing Co., Ltd. | 60,108,758 | RMB-denominated ordinary shares | 60,108,758 |
| Ernest Partners LLC — Client funds | 10,402,100 | RMB-denominated ordinary shares | 10,402,100 |
| # Lin Zuohua | 8,217,510 | RMB-denominated ordinary shares | 8,217,510 |
| # Zhongshan Xinda Investment Management Co., Ltd. | 6,123,636 | RMB-denominated ordinary shares | 6,123,636 |
| Hua Life Insurance Co., Ltd. - Self-owned funds | 4,692,263 | RMB-denominated ordinary shares | 4,692,263 |
| Cheng’an Asset Management Co., Ltd. — Cheng’an 99 Chuancheng No. 1 Private Equity Securities Investment Fund | 4,499,913 | RMB-denominated ordinary shares | 4,499,913 |
| Li Hong | 4,297,300 | RMB-denominated ordinary shares | 4,297,300 |
| ABC — CSI Smallcap 500 ETF | 4,170,889 | RMB-denominated ordinary shares | 4,170,889 |
| Description on the related relationship or parties acting-in-concert among the top ten ordinary shareholders without selling restrictions and between the top ten ordinary shareholders without selling restrictions and the top ten ordinary shareholders | 1. Among the top ten shareholders mentioned above, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by actual controllers of the Company, i.e. Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. 2. Except for the above situation, it is unknown to the Company whether there is related party relationship among other shareholders, or whether there is acting-in-concert among other shareholders as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders’ Shareholding of Listed Companies. | ||
| Description on the top 10 ordinary shareholders’ participation in margin trading and securities lending business (if any) (see Note 4) | 1. Shareholder Lin Zuohua holds 8,217,510 shares through a client credit transaction guarantee securities account; 2. Shareholder Zhongshan Xinda Investment Management Co., Ltd. holds 6,120,602 shares | ||
through a client credit transaction guarantee securities account.
Whether the top ten ordinary shareholders and the top ten shareholders without selling restrictions conducted the agreed repurchasetransaction during the reporting period
□ Yes √ No
The Company’s top ten ordinary shareholders and top ten ordinary shareholders without selling restrictions did not conduct agreedrepurchase transactions during the reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholder: Natural person holdingType of controlling shareholder: Legal person
| Name of controlling shareholder | Legal representative or person in charge of the institution | Date of establishment | Organization code | Principal businesses |
| Guangdong Zhongshun Paper Group Co., Ltd. | Deng Yingzhong | November 21, 1997 | 91442000617775375D | Investment management |
| Equity interests in other controlled and invested companies whose shares were listed in the PRC or overseas during the reporting period | None | |||
Changes of controlling shareholders during the reporting period
□ Applicable √ Not applicable
There was no change of the Company’s controlling shareholder during the reporting period.
3. Actual controller and person acting in concert
Nature of actual controller: Domestic natural personType of actual controller: Natural person
| Name | Relationship with actual controller | Nationality | Whether having obtained the right of abode in other countries or regions |
| Deng Yingzhong | Self | Chinese | No |
| Deng Guanbiao | Self | Chinese | Yes |
| Deng Guanjie | Self | Chinese | No |
| Main occupation and position | Refer to Section IV. “Corporate Governance” --> “Particulars of Directors, Supervisors and Senior Management” --> “Main working experience” for details. | ||
| Holding of domestic and overseas listed companies over the past ten years | None | ||
Changes of actual controllers during the reporting period
□ Applicable √ Not applicable
There was no change of the Company’s actual controllers during the reporting period.
Diagram on equity and control relationship between the Company and actual controllers
Actual controller controls the Company by entrust or other asset management methods
□ Applicable √ Not applicable
4. Share pledge by controlling shareholder or largest shareholder and person acting in concert reaching80% of shareholding
□ Applicable √ Not applicable
5. Other legal person shareholders holding 10% or more of shares
√ Applicable □ Not applicable
| Name of legal person shareholder | Legal representative or person in charge of the institution | Date of establishment | Registered capital | Principal activities or management activities |
| Chung Shun Co. | Deng Yingzhong | June 01, 1996 | HKD10,000 | No engagement in any specific business except for holding the Company’s equities |
6. Restrictions on share reductions of controlling shareholder, actual controller, restructuring parties andother commitment subjects
□ Applicable √ Not applicable
IV. Implementation of Share Repurchase during the Reporting PeriodImplementation progress of share repurchase
√ Applicable □ Not applicable
| Disclosure time of the plan | Number of shares to be repurchased | Proportion to total share capital | Expected repurchase amount | Expected repurchase time | Purpose of repurchase shares | Number of shares repurchased | Proportion of repurchased shares to the underlying stock involved in equity incentive plan (if any) |
| January 06, 2021 | 14,666,667 - 22,222,222 shares (estimated based on the cap repurchase price RMB45/share as reviewed and approved by the Board) | 1.12%-1.69% shares (calculated based on the share range that can be repurchased estimated as per cap repurchase price RMB45/share as reviewed and approved by the Board) | RMB660 million - RMB1 billion | Within the 12 months from the date of approval by the Board (January 6, 2021 - January 5, 2022) | Stock incentive plan or employee stock ownership plan | 24,863,087 | 1.89% |
Implementation of share repurchase by centralized bidding
□ Applicable √ Not applicable
Section VIII Particulars of Preference Shares
□ Applicable √ Not applicable
The Company had no preference shares during the reporting period.
Section IX Corporate Bonds
□ Applicable √ Not applicable
Section X Financial ReportI. Audit Report
| Type of auditor’s opinion | Standard unqualified |
| Signing date of the Audit Report | April 26, 2022 |
| Name of auditing organization | Mazars Certified Public Accountants (LLP) |
| Reference number of the Audit Report | Zhong-Huan-Shen-Zi (2022) No. 0510117 |
| Name of certified public accountants | Wang Bing, Pan Guiquan |
Audit ReportTo all shareholders of C&S Paper Co., Ltd.,
I. OpinionWe have audited the accompanying financial statements of C&S Paper Co., Ltd. (hereinafter “the Company”),which comprise the consolidated and the Parent Company’s balance sheet as at December 31, 2021, theconsolidated and the Parent Company’s income statement, the consolidated and the Parent Company’s cash flowstatement, and the consolidated and the Parent Company’s statement of the changes in equity for 2021, and notesto the financial statements.In our opinion, the accompanying financial statements have been prepared in accordance with the AccountingStandards for Business Enterprises in all material aspects, and they fairly present the consolidated and the ParentCompany’s financial position as of December 31, 2021, and the consolidated and the Parent Company’s operatingresults and cash flows for 2021.
II. Basis of OpinionWe conducted our audit in accordance with the Auditing Standards for PRC Certified Public Accountants. Ourresponsibilities under those standards are further described in the “Certified Public Accountants’ Responsibilitiesfor the Audit of the Financial Statements” section of our report. We are independent of the Company inaccordance with the Code of Ethics for Chinese Certified Public Accountants (the “Code”), and we have fulfilledour other ethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters. We determine the followings are key audit matters in need of communication in our report.
(I) Recognition of operating income
| Key audit matter | How the matter was addressed in our audit |
| As stated in Note VI (34) in the Company’s financial statements, the Company recorded an operating income of RMB9,149,870,464.80 in 2021. Since the amount of operating income is significant and a key performance indicator, there is a relatively high inherent risk, so we identify the recognition of operating income as a key audit matter. | Our audit procedures included: (1) We obtained an understanding of and evaluated the internal control design over the recognition of operating income and its operating effectiveness; (2) We obtained an understanding and evaluated whether policies for recognizing operating income were in compliance with requirements of accounting standards for business enterprises via interviewing the management, consulting the Company’s accounting policies, etc.; (3) We checked whether there were any abnormalities in the operations of the Company’s major customers and whether there was related relationship between such customers and the Company or its related parties by checking the business registration information of the customers and contracts with them; (4) We adopted the sampling method to select some customers and send them the confirmation letter to verify the balance of accounts receivable, the balance of prepayment, and the amount of sales income; (5) In respect of domestic sales, we adopted the sampling method to check the large-value contracts and sales orders as well as their corresponding invoices, outbound orders, delivery orders, customer receipts, etc.; for export sales, we used the sampling method to check large-value contracts and sales orders as well as their corresponding invoices, customs declarations, freight bills of lading, customer receipts, etc.; (6) We conducted cutoff test for operating income to assess whether operating income was recognized in an appropriate period. |
(II) Recognition of selling expenses
| Key audit matter | How the matter was addressed in our audit |
| As stated in Note VI(36) in the Company’s financial statements, the Company recorded a selling expense of RMB1,986,544,514.02 in 2021, accounting for 21.71% of operating income. Since selling expense has a great impact on the Company’s financial results, which may cause a major misstatement risk, we identify the recognition of selling expense as a | Our audit procedures included: (1) We obtained an understanding of and evaluated the internal control design over the recognition of selling expense and its operating effectiveness; (2) We obtained the detailed list of selling expenses, and analyzed the reasonableness of each expense item based on features of the Company’s businesses; we also analyzed the proportion of main expense items in the main business income and whether the change trend of selling expense consistent with that of income; (3) We conducted a spot check of main items under selling expense and selected and |
| key audit matter. | checked some selling expense vouchers against corresponding contracts, invoices, bank receipts and other original documents, as well as the Company’s sales promotion policies, remuneration policies, etc.; (4) We conducted cutoff test for selling expense to assess whether selling expense was recognized across periods. |
IV. Other informationThe Company’s management is responsible for other information. Other information includes the informationincluded in the Company’s 2021 Annual Report, but excludes the financial statements and our audit report.Our audit opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit process or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that if there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Governance Layer for Financial StatementsThe management of C&S Paper Co., Ltd. (hereinafter the “Management”) is responsible for preparing financialstatements in accordance with the Accounting Standards for Business Enterprises, and fairly presenting them; theManagement also needs to design, implement and maintain necessary internal control to enable that the financialstatements are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing matters in relation to going concern (if applicable) and applying thegoing-concern assumption unless the Management intends to liquidate the Company, cease operations, or have norealistic alternative but to do so.The governance layer is responsible for overseeing the financial reporting process of the Company.
VI. Certified Public Accountants’ Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether these financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or errorand are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit work in accordance with CSAs, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.(IV) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required to drawing attention in our audit report to the related disclosures in thesefinancial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based onthe audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may causethe Company to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We are responsible forthe direction, supervision and performance of the group audit, and remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during ouraudit.We also provide those charged with governance with a statement that we comply with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and related safeguards (if applicable).From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the period and are therefore the key audit matters. Wedescribe these matters in our audit report unless law or regulation precludes public disclosure about the matter orwhen, in tiny minority circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
Mazars Certified Public Accountants (LLP) Chinese Certified Public Accountant: Wang Bing
Chinese Certified Public Accountant: Pan Guiquan
Wuhan, PRC
April 26, 2022
II. Financial StatementsUnit of financial statements: RMB
1. Consolidated balance sheet
Prepared by: C&S Paper Co., Ltd.
December 31, 2021
Unit: RMB
| Item | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Monetary funds | 875,052,493.12 | 1,125,196,199.56 |
| Settlement reserve | ||
| Lending to banks and other financial institutions | ||
| Tradable financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 2,327,060.20 | 724,419.74 |
| Accounts receivable | 1,177,831,399.28 | 1,051,423,939.59 |
| Accounts receivable financing | ||
| Prepayments | 36,685,769.73 | 26,819,108.57 |
| Premium receivable | ||
| Reinsurance payables | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 12,353,794.41 | 15,824,945.56 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets held under resale agreements | ||
| Inventory | 1,467,631,516.95 | 1,661,274,495.32 |
| Contract assets | ||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 |
| Non-current assets due within one year |
| Other current assets | 123,530,879.96 | 101,584,569.30 |
| Total current assets | 3,752,485,973.34 | 4,039,920,737.33 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in creditor’s rights | ||
| Investments in other creditor’s rights | ||
| Long-term receivable | ||
| Long-term equity investment | ||
| Investment in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 33,138,481.74 | 34,575,365.94 |
| Fixed assets | 3,129,371,506.40 | 2,792,587,302.21 |
| Construction work in progress | 134,875,696.94 | 275,904,617.95 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 14,300,520.77 | |
| Intangible assets | 168,453,928.11 | 169,355,772.24 |
| Development expenses | ||
| Goodwill | 64,654.15 | 64,654.15 |
| Long-term deferred expenses | 16,762,904.09 | 26,635,983.14 |
| Deferred income tax assets | 182,185,944.85 | 111,367,362.66 |
| Other non-current assets | 91,642,363.45 | 28,027,952.15 |
| Total non-current assets | 3,770,796,000.50 | 3,438,519,010.44 |
| Total assets | 7,523,281,973.84 | 7,478,439,747.77 |
| Current liabilities: | ||
| Short-term borrowings | 142,942,941.34 | |
| Borrowings from PBC | ||
| Placements from banks and other financial institutions | ||
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 334,969,632.58 | 234,887,563.22 |
| Accounts payable | 829,113,780.31 | 761,519,389.26 |
| Payments received in advance | ||
| Contract liabilities | 164,360,443.34 | 137,333,617.40 |
| Proceeds from financial assets sold under repo | ||
| Customer bank deposits and due to banks and other financial institutions | ||
| Funds from securities trading agency | ||
| Funds from securities underwriting agency | ||
| Employee remuneration payable | 139,551,406.46 | 123,524,627.11 |
| Tax and fees payable | 107,184,810.97 | 112,608,054.87 |
| Other payables | 854,872,178.78 | 754,844,580.09 |
| Including: Interests payable | ||
| Dividends payable | 1,352,746.20 | 1,437,466.77 |
| Transaction fee and commission receivable | ||
| Reinsurance payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 8,616,487.38 | |
| Other current liabilities | 21,250,613.29 | 17,628,086.63 |
| Total current liabilities | 2,459,919,353.11 | 2,285,288,859.92 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | 5,565,928.14 | |
| Long-term payable | ||
| Long-term employee remuneration payable | ||
| Provision | ||
| Deferred income | 104,483,429.54 | 115,101,158.13 |
| Deferred income tax liabilities | 46,514,550.50 | 35,903,653.30 |
| Other non-current liabilities | ||
| Total non-current liabilities | 156,563,908.18 | 151,004,811.43 |
| Total liabilities | 2,616,483,261.29 | 2,436,293,671.35 |
| Owner’s equity: | ||
| Share capital | 1,312,457,555.00 | 1,311,487,077.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 940,742,686.19 | 907,006,505.05 |
| Less: Treasury shares | 722,243,283.39 | 96,480,911.29 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 106,984,275.42 | 61,469,258.27 |
| General reserves | ||
| Retained earnings | 3,265,611,428.36 | 2,858,664,147.39 |
| Total equity attributable to owners of the parent company | 4,903,552,661.58 | 5,042,146,076.42 |
| Equities of minority shareholders | 3,246,050.97 | |
| Total owner’s equity | 4,906,798,712.55 | 5,042,146,076.42 |
| Total liabilities and owners’ equities | 7,523,281,973.84 | 7,478,439,747.77 |
Legal representative: Liu Peng Person in charge of accounting: Dong Ye Person in charge of accounting department: Xu Xianjing
2. Balance sheet of the Parent Company
Unit: RMB
| Item | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Monetary funds | 58,690,877.05 | 170,229,178.13 |
| Tradable financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 10,185.51 | |
| Accounts receivable | 171,055,039.37 | 92,647,372.33 |
| Accounts receivable financing | ||
| Prepayments | 3,867,904.95 | 7,940,396.34 |
| Other receivables | 128,580,102.05 | 136,987,584.64 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 120,747,222.55 | 156,605,546.36 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 23,545,158.50 | 52,517,725.87 |
| Total current assets | 506,496,489.98 | 616,927,803.67 |
| Non-current assets: | ||
| Investments in creditor’s rights | ||
| Investments in other creditor’s rights | ||
| Long-term receivable | ||
| Long-term equity investment | 1,945,421,378.56 | 1,928,113,219.50 |
| Investment in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 17,160,598.03 | 17,939,329.51 |
| Fixed assets | 238,119,182.14 | 257,354,688.59 |
| Construction work in progress | 114,301,119.02 | |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 2,207,428.16 | |
| Intangible assets | 27,486,332.17 | 25,205,232.21 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 68,572,899.42 | 46,811,106.77 |
| Other non-current assets | 82,852,575.28 | 2,619,959.27 |
| Total non-current assets | 2,496,121,512.78 | 2,278,043,535.85 |
| Total assets | 3,002,618,002.76 | 2,894,971,339.52 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Tradable financial liabilities |
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 792,444,139.83 | 420,061,168.44 |
| Payments received in advance | ||
| Contract liabilities | 38,166,115.55 | 17,388,431.01 |
| Employee remuneration payable | 42,822,592.18 | 44,678,713.21 |
| Tax and fees payable | 7,119,037.16 | 5,995,417.05 |
| Other payables | 103,779,839.13 | 126,072,040.24 |
| Including: Interests payable | ||
| Dividends payable | 1,352,746.20 | 1,437,466.77 |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 1,125,486.62 | |
| Other current liabilities | 5,334,195.60 | 2,260,496.03 |
| Total current liabilities | 990,791,406.07 | 616,456,265.98 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | 1,083,172.96 | |
| Long-term payable | ||
| Long-term employee remuneration payable | ||
| Provision | ||
| Deferred income | 4,648,115.81 | 5,855,467.25 |
| Deferred income tax liabilities | 7,528,901.04 | 7,202,336.33 |
| Other non-current liabilities | ||
| Total non-current liabilities | 13,260,189.81 | 13,057,803.58 |
| Total liabilities | 1,004,051,595.88 | 629,514,069.56 |
| Owner’s equity: | ||
| Share capital | 1,312,457,555.00 | 1,311,487,077.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds |
| Capital reserve | 863,078,990.57 | 831,693,206.19 |
| Less: Treasury shares | 722,243,283.39 | 96,480,911.29 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 106,862,941.14 | 61,347,923.99 |
| Retained earnings | 438,410,203.56 | 157,409,974.07 |
| Total owner’s equity | 1,998,566,406.88 | 2,265,457,269.96 |
| Total liabilities and owners’ equities | 3,002,618,002.76 | 2,894,971,339.52 |
3. Consolidated income statement
Unit: RMB
| Item | 2021 | 2020 |
| I. Total Operating Income | 9,149,870,464.80 | 7,823,528,416.32 |
| Including: Operating income | 9,149,870,464.80 | 7,823,528,416.32 |
| Interest income | ||
| Gross earned premiums | ||
| Service charge and commission income | ||
| II. Total Operating Cost | 8,460,986,513.10 | 6,728,790,634.82 |
| Including: Operating costs | 5,863,049,104.38 | 4,590,904,040.35 |
| Interest expenses | ||
| Service charge and commission expenses | ||
| Surrender value | ||
| Net compensation expenses | ||
| Net appropriation of insurance reserve | ||
| Policy dividends expenses | ||
| Reinsurance costs | ||
| Tax and surcharges | 65,545,652.41 | 56,112,918.09 |
| Selling expenses | 1,986,544,514.02 | 1,544,562,244.71 |
| Administrative expenses | 341,144,204.30 | 364,914,344.30 |
| R&D expenses | 211,964,212.18 | 190,298,633.61 |
| Finance expenses | -7,261,174.19 | -18,001,546.24 |
| Including: Interest fees | 1,872,913.37 | 2,903,635.12 |
| Interest income | 10,512,490.53 | 8,202,097.37 |
| Plus: Other income | 24,094,502.50 | 29,224,284.70 |
| Return on investment ("-" indicates loss) | 365,973.72 | 3,868,134.28 |
| Including: Return on investment in associates and joint ventures | ||
| Income from the derecognition of financial assets measured at amortized cost | ||
| Exchange gains ("-" indicates loss) | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -9,360,485.52 | -6,462,152.71 |
| Asset impairment losses ("-" indicates loss) | -27,791,339.98 | -15,863,724.17 |
| Return on disposal of assets ("-" indicates loss) | -462,228.42 | -1,630,681.60 |
| III. Operating Profit ("-" indicates loss) | 675,730,374.00 | 1,103,873,642.00 |
| Plus: Non-operating income | 3,810,360.34 | 5,429,670.00 |
| Less: Non-operating expenditure | 12,059,080.49 | 20,912,859.12 |
| IV. Total Profit ("-" indicates total loss) | 667,481,653.85 | 1,088,390,452.88 |
| Less: Income tax expense | 86,436,599.78 | 182,501,371.47 |
| V. Net Profit ("-" indicates net loss) | 581,045,054.07 | 905,889,081.41 |
| i. Classified by operation continuity | ||
| 1. Net profit from continued operation ("-" indicates net loss) | 581,045,054.07 | 905,889,081.41 |
| 2. Net profit from discontinued operation ("-" indicates net loss) | ||
| ii. Classified by attribution of ownership | ||
| 1. Net profit attributable to owners of the parent company | 581,097,222.93 | 905,889,081.41 |
| 2. Minority shareholders’ profits and | -52,168.86 |
| losses | ||
| VI. Net Amount of Other Comprehensive Income after Tax | ||
| Total other comprehensive after-tax net income attributable to owners of the parent company | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss | ||
| 1. Other comprehensive income to be transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor’s rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor’s rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| Total other comprehensive after-tax net |
| income attributable to minority shareholders | ||
| VII. Total Comprehensive Income | 581,045,054.07 | 905,889,081.41 |
| Total comprehensive income attributable to owners of the parent company | 581,097,222.93 | 905,889,081.41 |
| Total comprehensive income attributable to minority shareholders | -52,168.86 | |
| VIII. Earnings per Share: | ||
| i. Basic earnings per share | 0.45 | 0.70 |
| ii. Diluted earnings per share | 0.44 | 0.69 |
For business combinations of the current period under common control, the net profit realized by the combined party before thecombination is: RMB0.00; the net profit realized by the combined party in last period is: RMB0.00.Legal representative: Liu Peng Person in charge of accounting: Dong Ye Person in charge of accounting department: Xu Xianjing
4. Income statement of the Parent Company
Unit: RMB
| Item | 2021 | 2020 |
| I. Operating Income | 2,383,117,016.30 | 1,632,515,354.88 |
| Less: Operating cost | 2,116,546,576.95 | 1,377,798,965.81 |
| Tax and surcharges | 6,699,681.18 | 5,201,738.09 |
| Selling expenses | 173,898,463.88 | 127,888,051.22 |
| Administrative expenses | 135,461,184.59 | 179,278,540.50 |
| R&D expenses | ||
| Finance expenses | -7,098,965.55 | -5,095,985.70 |
| Including: Interest fees | 134,353.98 | |
| Interest income | 1,173,475.32 | 2,906,543.07 |
| Plus: Other income | 4,353,161.48 | 1,988,938.21 |
| Return on investment ("-" indicates loss) | 482,704,072.79 | 143,256,231.99 |
| Including: Return on investment in associates and joint ventures | ||
| Profits from derecognition of financial assets at amortized cost |
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -628,473.64 | -457,064.44 |
| Asset impairment losses ("-" indicates loss) | -2,273,866.23 | -572,411.86 |
| Return on disposal of assets ("-" indicates loss) | -613,479.84 | |
| II. Operating Profit ("-" indicates loss) | 441,764,969.65 | 91,046,259.02 |
| Plus: Non-operating income | 737,533.42 | 393,442.74 |
| Less: Non-operating expenditure | 7,335,396.44 | 15,848,705.74 |
| III. Total Profit ("-" indicates total loss) | 435,167,106.63 | 75,590,996.02 |
| Less: Income tax expense | -19,983,064.82 | -7,045,758.08 |
| IV. Net Profit ("-" indicates net loss) | 455,150,171.45 | 82,636,754.10 |
| i. Net profit from continued operation ("-" indicates net loss) | 455,150,171.45 | 82,636,754.10 |
| ii. Net profit from discontinued operation ("-" indicates net loss) | ||
| V. Net Amount of Other Comprehensive Income after Tax | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss |
| 1. Other comprehensive income to be transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor’s rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor’s rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| VI. Total Comprehensive Income | 455,150,171.45 | 82,636,754.10 |
| VII. Earnings per Share: | ||
| i. Basic earnings per share | ||
| ii. Diluted earnings per share |
5. Consolidated cash flow statement
Unit: RMB
| Item | 2021 | 2020 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 9,026,736,956.62 | 7,641,541,541.60 |
| Net increase in deposits from customers, banks and non-bank financial institutions | ||
| Net increase in due to central banks | ||
| Net increase in placements from other financial institutions | ||
| Cash received from the premium of direct insurance contracts | ||
| Net cash from reinsurance business |
| Net increase in deposits and investment of the insured | ||
| Cash obtained from interest, net fee and commission | ||
| Net increase in placements from banks and other financial institutions | ||
| Net increase in repo service fund | ||
| Net cash from agent securities trading | ||
| Tax rebates | 868,062.36 | 8,043,686.95 |
| Cash received related to other operating activities | 70,331,809.95 | 152,705,536.70 |
| Sub-total of cash inflow from operating activities | 9,097,936,828.93 | 7,802,290,765.25 |
| Cash paid for goods purchased and services rendered | 5,434,415,226.04 | 4,999,555,647.15 |
| Net loans and advances to customers | ||
| Net increase in deposits with the central bank, banks and non-bank financial institutions | ||
| Cash paid for claims of direct insurance contracts | ||
| Net increase in placements with banks and non-bank financial institutions | ||
| Cash paid for interest, fee and commission | ||
| Cash paid for dividends of the insured | ||
| Cash paid to and on behalf of employees | 838,638,770.81 | 665,109,162.40 |
| Tax payments | 584,815,507.83 | 534,941,400.79 |
| Cash payments related to other operating activities | 920,487,717.42 | 774,483,692.66 |
| Sub-total of cash outflow from operating activities | 7,778,357,222.10 | 6,974,089,903.00 |
| Net cash flow from operating activities | 1,319,579,606.83 | 828,200,862.25 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 365,973.72 | 3,868,134.28 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 11,062,476.47 | 48,828,706.60 |
| Net amount of cash received from the disposal of subsidiaries and other operating organizations | 38,219.83 | |
| Cash received related to other investing activities | 50,000,000.00 | 127,105,000.00 |
| Sub-total of cash inflow from investing activities | 61,466,670.02 | 179,801,840.88 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 636,140,768.78 | 511,677,417.02 |
| Cash paid for investments | ||
| Net increase in pledged loans | ||
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing activities | 72,479,083.36 | 50,000,000.00 |
| Sub-total of cash outflow from investing activities | 708,619,852.14 | 561,677,417.02 |
| Net cash flows from investing activities | -647,153,182.12 | -381,875,576.14 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | 34,820,899.15 | 28,101,700.23 |
| Including: Proceeds received by subsidiaries from minority shareholders’ investment | ||
| Cash received from borrowings | 187,245,860.18 | 383,892,976.77 |
| Cash received related to other financing activities |
| Sub-total of cash inflow from financing activities | 222,066,759.33 | 411,994,677.00 |
| Cash paid for repayments of borrowings | 328,879,098.49 | 301,057,260.06 |
| Cash payment for interest expenses and distribution of dividends or profits | 129,946,347.96 | 99,989,760.28 |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | ||
| Cash payments related to other financing activities | 682,429,516.95 | 80,056,125.89 |
| Sub-total of cash outflow from financing activities | 1,141,254,963.40 | 481,103,146.23 |
| Net cash flows from financing activities | -919,188,204.07 | -69,108,469.23 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | -5,474,680.66 | -3,179,534.13 |
| V. Net Increase in Cash and Cash Equivalents | -252,236,460.02 | 374,037,282.75 |
| Plus: Opening balance of cash and cash equivalents | 1,050,034,135.72 | 675,996,852.97 |
| VI. Closing Balance of Cash and Cash Equivalents | 797,797,675.70 | 1,050,034,135.72 |
6. Cash flow statement of the Parent Company
Unit: RMB
| Item | 2021 | 2020 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 2,271,872,550.53 | 1,317,396,402.58 |
| Tax rebates | 120,214.00 | |
| Cash received related to other operating activities | 807,061,207.28 | 1,834,396,504.14 |
| Sub-total of cash inflow from operating activities | 3,078,933,757.81 | 3,151,913,120.72 |
| Cash paid for goods purchased and services rendered | 1,619,835,759.07 | 985,895,534.46 |
| Cash paid to and on behalf of | 186,144,361.74 | 127,413,062.62 |
| employees | ||
| Tax payments | 44,702,981.48 | 31,053,247.68 |
| Cash payments related to other operating activities | 897,857,291.76 | 1,414,912,983.81 |
| Sub-total of cash outflow from operating activities | 2,748,540,394.05 | 2,559,274,828.57 |
| Net cash flow from operating activities | 330,393,363.76 | 592,638,292.15 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 482,704,072.79 | 143,256,231.99 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 10,290.00 | 48,336.80 |
| Net amount of cash received from the disposal of subsidiaries and other operating organizations | ||
| Cash received related to other investing activities | 50,000,000.00 | 127,105,000.00 |
| Sub-total of cash inflow from investing activities | 532,714,362.79 | 270,409,568.79 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 177,904,868.68 | 32,119,334.97 |
| Cash paid for investments | 7,740,000.00 | 665,600,000.00 |
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing activities | 10,000,000.00 | 50,000,000.00 |
| Sub-total of cash outflow from investing activities | 195,644,868.68 | 747,719,334.97 |
| Net cash flows from investing activities | 337,069,494.11 | -477,309,766.18 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | 31,560,899.15 | 28,101,700.23 |
| Cash received from borrowings | ||
| Cash received related to other financing activities | ||
| Sub-total of cash inflow from financing activities | 31,560,899.15 | 28,101,700.23 |
| Cash paid for repayments of borrowings | 9,477,423.45 | |
| Cash payment for interest expenses and distribution of dividends or profits | 128,727,133.02 | 97,014,306.99 |
| Cash payments related to other financing activities | 676,395,258.62 | 32,970,709.24 |
| Sub-total of cash outflow from financing activities | 814,599,815.09 | 129,985,016.23 |
| Net cash flows from financing activities | -783,038,915.94 | -101,883,316.00 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | -1,731.44 | 254,432.97 |
| V. Net Increase in Cash and Cash Equivalents | -115,577,789.51 | 13,699,642.94 |
| Plus: Opening balance of cash and cash equivalents | 169,851,203.76 | 156,151,560.82 |
| VI. Closing Balance of Cash and Cash Equivalents | 54,273,414.25 | 169,851,203.76 |
7. Consolidated statement of changes in owner’s equity
Amount of the current period
Unit: RMB
| Item | 2021 | ||||||||||||||
| Owner’s equity attributable to the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 1,311,487,077.00 | 907,006,505.05 | 96,480,911.29 | 61,469,258.27 | 2,858,664,147.39 | 5,042,146,076.42 | 5,042,146,076.42 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business combinations involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of | 1,311,487,077.0 | 907,006,505.05 | 96,480,911.29 | 61,469,258.27 | 2,858,664,147.39 | 5,042,146,076.42 | 5,042,146,076.42 | ||||||||
| the Year | 0 | ||||||||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 970,478.00 | 33,736,181.14 | 625,762,372.10 | 45,515,017.15 | 406,947,280.97 | -138,593,414.84 | 3,246,050.97 | -135,347,363.87 | |||||||
| i. Total comprehensive income | 581,097,222.93 | 581,097,222.93 | -52,168.86 | 581,045,054.07 | |||||||||||
| ii. Capital contributed or decreased by owner | 970,478.00 | 33,736,181.14 | 625,762,372.10 | -591,055,712.96 | 3,298,219.83 | -587,757,493.13 | |||||||||
| 1 Ordinary shares contributed by owners | 3,131,211.00 | 31,164,564.50 | 34,295,775.50 | 3,260,000.00 | 37,555,775.50 | ||||||||||
| 2 Capital contributed by owners of other equity instruments | |||||||||||||||
| 3 Share based payments recognized as owner’s equity | -2,160,733.00 | 2,571,616.64 | -35,487,600.13 | 35,898,483.77 | 35,898,483.77 | ||||||||||
| 4 Others | 661,249,972.23 | -661,249,972.23 | 38,219.83 | -661,211,752.40 | |||||||||||
| iii. Profit distribution | 45,515,017.15 | -174,149,941.96 | -128,634,924.81 | -128,634,924.81 | |||||||||||
| 1 Appropriation of surplus reserves | 45,515,017.15 | -45,515,017.15 | |||||||||||||
| 2 Appropriation of general risk reserves | |||||||||||||||
| 3 Distribution to owners (or shareholders) | -128,634,924.81 | -128,634,924.81 | -128,634,924.81 | ||||||||||||
| 4 Others | |||||||||||||||
| iv. Interior balance from owner’s equity | |||||||||||||||
| 1 Added capital (or share capital) from capital reserves | |||||||||||||||
| 2 Added capital (or share |
| capital) from surplus reserves | |||||||||||||||
| 3 Compensation of loss with surplus reserves | |||||||||||||||
| 4 Retained earnings of carry-over of the defined benefit plan | |||||||||||||||
| 5 Retained earnings of carry-over of other comprehensive income | |||||||||||||||
| 6 Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1 Appropriation for the period | |||||||||||||||
| 2 Use for the period | |||||||||||||||
| vi. Others | |||||||||||||||
| IV. Closing Balance of the Period | 1,312,457,555.00 | 940,742,686.19 | 722,243,283.39 | 106,984,275.42 | 3,265,611,428.36 | 4,903,552,661.58 | 3,246,050.97 | 4,906,798,712.55 |
Amount of last period
Unit: RMB
| Item | 2020 | ||||||||||||||
| Owner’s equity attributable to the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Prefe | Perp | Othe | |||||||||||||
| rence shares | etual bonds | rs | |||||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business combinations involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 2,595,804.00 | 146,275,088.48 | -8,311,737.71 | 8,263,675.41 | 799,695,311.59 | 965,141,617.19 | 965,141,617.19 | ||||||||
| i. Total comprehensive income | 905,889,081.41 | 905,889,081.41 | 905,889,081.41 | ||||||||||||
| ii. Capital contributed or decreased by owner | 2,595,804.00 | 146,275,088.48 | -8,311,737.71 | 157,182,630.19 | 157,182,630.19 | ||||||||||
| 1 Ordinary shares contributed by owners | 3,610,416.00 | 34,809,136.79 | 38,419,552.79 | 38,419,552.79 | |||||||||||
| 2 Capital contributed by owners |
| of other equity instruments | |||||||||||||||
| 3 Share based payments recognized as owner’s equity | -1,014,612.00 | 111,465,951.69 | -35,992,459.47 | 146,443,799.16 | 146,443,799.16 | ||||||||||
| 4 Others | 27,680,721.76 | -27,680,721.76 | -27,680,721.76 | ||||||||||||
| iii. Profit distribution | 8,263,675.41 | -106,193,769.82 | -97,930,094.41 | -97,930,094.41 | |||||||||||
| 1 Appropriation of surplus reserves | 8,263,675.41 | -8,263,675.41 | |||||||||||||
| 2 Appropriation of general risk reserves | |||||||||||||||
| 3 Distribution to owners (or shareholders) | -97,930,094.41 | -97,930,094.41 | -97,930,094.41 | ||||||||||||
| 4 Others | |||||||||||||||
| iv. Interior balance from owner’s equity | |||||||||||||||
| 1 Added capital (or share capital) from capital reserves | |||||||||||||||
| 2 Added capital (or share capital) from surplus reserves | |||||||||||||||
| 3 Compensation of loss with surplus reserves | |||||||||||||||
| 4 Retained earnings of carry-over of the defined benefit plan | |||||||||||||||
| 5 Retained earnings of carry-over of other comprehensive income |
| 6 Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1 Appropriation for the period | |||||||||||||||
| 2 Use for the period | |||||||||||||||
| vi. Others | |||||||||||||||
| IV. Closing Balance of the Period | 1,311,487,077.00 | 907,006,505.05 | 96,480,911.29 | 61,469,258.27 | 2,858,664,147.39 | 5,042,146,076.42 | 5,042,146,076.42 |
8. Statement of changes in owner’s equity of the Parent Company
Amount of the current period
Unit: RMB
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner’s equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,311,487,077.00 | 831,693,206.19 | 96,480,911.29 | 61,347,923.99 | 157,409,974.07 | 2,265,457,269.96 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,311,487,077.00 | 831,693,206.19 | 96,480,911.29 | 61,347,923.99 | 157,409,974.07 | 2,265,457,269.96 | ||||||
| III. Changes in the Period ("-" | 970,478.00 | 31,385,784.38 | 625,762,372.10 | 45,515,017.15 | 281,000,229.49 | -266,890,863.08 | ||||||
| Indicates Decrease) | ||||||||||||
| i. Total comprehensive income | 455,150,171.45 | 455,150,171.45 | ||||||||||
| ii. Capital contributed or decreased by owner | 970,478.00 | 31,385,784.38 | 625,762,372.10 | -593,406,109.72 | ||||||||
| 1 Ordinary shares contributed by owners | 3,131,211.00 | 31,164,564.50 | 34,295,775.50 | |||||||||
| 2 Capital contributed by owners of other equity instruments | ||||||||||||
| 3 Share based payments recognized as owner’s equity | -2,160,733.00 | 221,219.88 | -35,487,600.13 | 33,548,087.01 | ||||||||
| 4 Others | 661,249,972.23 | -661,249,972.23 | ||||||||||
| iii. Profit distribution | 45,515,017.15 | -174,149,941.96 | -128,634,924.81 | |||||||||
| 1 Appropriation of surplus reserves | 45,515,017.15 | -45,515,017.15 | ||||||||||
| 2 Distribution to owners (or shareholders) | -128,634,924.81 | -128,634,924.81 | ||||||||||
| 3 Others | ||||||||||||
| iv. Interior balance from owner’s equity | ||||||||||||
| 1 Added capital (or share capital) from capital reserves | ||||||||||||
| 2 Added capital (or share capital) from surplus reserves | ||||||||||||
| 3 Compensation of loss with surplus reserves | ||||||||||||
| 4 Retained earnings of carry-over of the defined benefit plan |
| 5 Retained earnings of carry-over of other comprehensive income | ||||||||||||
| 6 Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1 Appropriation for the period | ||||||||||||
| 2 Use for the period | ||||||||||||
| vi. Others | ||||||||||||
| IV. Closing Balance of the Period | 1,312,457,555.00 | 863,078,990.57 | 722,243,283.39 | 106,862,941.14 | 438,410,203.56 | 1,998,566,406.88 |
Amount of last period
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner’s equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 2,595,804.00 | 141,451,481.81 | -8,311,737.71 | 8,263,675.41 | -23,557,015.72 | 137,065,683.21 | ||||||
| i. Total comprehensive income | 82,636,754.10 | 82,636,754.10 | ||||||||||
| ii. Capital contributed or decreased by owner | 2,595,804.00 | 141,451,481.81 | -8,311,737.71 | 152,359,023.52 | ||||||||
| 1 Ordinary shares contributed by owners | 3,610,416.00 | 34,809,136.79 | 38,419,552.79 | |||||||||
| 2 Capital contributed by owners of other equity instruments | ||||||||||||
| 3 Share based payments recognized as owner’s equity | -1,014,612.00 | 106,642,345.02 | -35,992,459.47 | 141,620,192.49 | ||||||||
| 4 Others | 27,680,721.76 | -27,680,721.76 | ||||||||||
| iii. Profit distribution | 8,263,675.41 | -106,193,769.82 | -97,930,094.41 | |||||||||
| 1 Appropriation of surplus reserves | 8,263,675.41 | -8,263,675.41 | ||||||||||
| 2 Distribution to owners (or shareholders) | -97,930,094.41 | -97,930,094.41 | ||||||||||
| 3 Others | ||||||||||||
| iv. Interior balance from owner’s equity | ||||||||||||
| 1 Added capital (or share capital) from capital reserves | ||||||||||||
| 2 Added capital (or share capital) from surplus reserves | ||||||||||||
| 3 Compensation of loss with surplus reserves | ||||||||||||
| 4 Retained earnings of carry-over of |
| the defined benefit plan | ||||||||||||
| 5 Retained earnings of carry-over of other comprehensive income | ||||||||||||
| 6 Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1 Appropriation for the period | ||||||||||||
| 2 Use for the period | ||||||||||||
| vi. Others | ||||||||||||
| IV. Closing Balance of the Period | 1,311,487,077.00 | 831,693,206.19 | 96,480,911.29 | 61,347,923.99 | 157,409,974.07 | 2,265,457,269.96 |
III. Basic Information of the Company
C&S Paper Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited company restructured fromZhongshan Zhongshun Paper Manufacturing Co., Ltd., with all shareholders of the original company as itsinitiators. The Company has obtained a business license of enterprise legal person with the registration number of442000400013713 issued by Guangdong Province Administration for Industry and Commerce on December 31,2008.As at December 31, 2021, the Company has had a registered capital of RMB1,312,457,555.00 and a share capitalof RMB1,312,457,555.00.
1. Registered address, form of organization, and headquarters of the Company
Form of organization: Company limited by sharesRegistered address: No. 1 Longcheng Road, Dongsheng Town, Zhongshan CityOffice address of the headquarters of the Company: No. 136 Caihong Avenue, West District, Zhongshan City
2. Business nature and main business activities of the Company
C&S Paper Co., Ltd. and its subsidiaries (hereafter collectively referred to as “the Company”) are in thehousehold paper industry. The Company mainly engages in the following: R&D, production, processing andsales (including online sales): high-end household paper series products, tissue boxes, sanitary products,cosmetics, non-woven products, daily necessities (limited to daily plastic products, daily metal products, dailyrubber products, and daily ceramic products), daily chemical products (excluding hazardous chemicals), andClass I medical devices; operation and production of Class II and Class III medical devices.
3. Actual controller of the Company
The actual controllers of the Company are Deng Yingzhong, Deng Guanbiao, and Deng Guanjie (DengYingzhong is the other two’s father).
4. Approver for the issue of the financial statements and date of approvalThe financial statements were approved for issue by the Board of Directors of the Company on April 26,2022.
5. Consolidation scope of financial statements
As of December 31, 2021, the Company has 28 subsidiaries that are included in the consolidated scope, asdetailed in “Note IX. Equities in Other Entities”. Compared with last year, ten subsidiaries have been newly addedinto while one subsidiary has been deleted from the consolidated scope during the reporting period. For details,see “Note VIII. Changes in Consolidated Scope”.
IV. Preparation Basis for Financial Statements
1. Basis of preparation
The financial statements of the Company have been prepared on a going concern basis based on actualtransactions and events and according to the Accounting Standards for Business Enterprises - Basic Standardspromulgated by the Ministry of Finance (MOF No. 33 Document and No. 76 Revision), the 42 accountingstandards, Guidelines for the Application of the Accounting Standards for Business Enterprises, interpretation tothe accounting standards for business enterprises and other relevant regulations that are successively promulgatedon or after February 15, 2006 (hereinafter collectively referred to as "Accounting Standards for BusinessEnterprises"), and rules set out in No. 15 Preparation and Reporting Rules of Information Disclosure of PublicOffering Companies - General Rules for Financial Statements (2014 Revision) issued by China Securities
Regulatory Commission based on actual transactions and events.In accordance with the relevant rules of Accounting Standards for Business Enterprises, the financial accountingof the Company is based on accrual basis. Apart from some financial tools, the accounting measurement of thefinancial statements is based on historical cost method. Provision for impairment of asset is set aside if it isrecognized.
2. Going concern
The Company shall be a going concern for at least 12 months following the end of the reporting period. There areno major events that will affect the Company’s operational ability; therefore the assumption on which the financialstatements are based is reasonable.
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates:
C&S Paper Co., Ltd. and all its subsidiaries have set out several specific accounting policies and accountingestimates for transactions and events with relation to the recognition of incomes and income taxes in accordancewith the Accounting Standards for Business Enterprises and their own operational characteristics. Please refer to“Note V (39) Revenue” for details. As for explanations of significant accounting judgments and estimates madeby the management, please refer to “Note V (44) Important accounting judgments and estimates”.
1. Statement of compliance with the accounting standards for business enterprisesThe financial statements of the Company conform to the requirements set out in the Accounting Standards forBusiness Enterprises. The statements truthfully and completely reflect the financial status of the Company as ofDecember 31, 2021 as well as its operating results, cash flow, and other relevant information during 2021. Inaddition, the financial statements of the Company are also in accordance with disclosure requirements forfinancial statements and notes in No. 15 Preparation and Reporting Rules of Information Disclosure of PublicOffering Companies - General Rules for Financial Statements of the China Securities Regulatory Commission(2014 Revision) in all material aspects
2. Accounting period
The accounting period of the Company is divided into annual and interim periods. Interim periods refer to anyreporting period shorter than a full accounting year. The accounting year of the Company is from January 1 toDecember 31 of each calendar year.
3. Operating cycle
The operating cycle of the Company normally refers to the periods during which the Company purchases assetsfor processing and then gets cash or cash equivalents from the processed items. The Company sets 12 months as afull operating cycle and uses the 12-month period as a standard for the liquidity of assets and liabilities.
4. Standard currency for accounting
RMB is the main currency in the main economic environments in which the Company and its domesticsubsidiaries operate. Therefore, the Company and its subsidiaries use RMB as the standard currency forbookkeeping. The currency for accounting used in the Company’s financial statements is RMB.
5. Accounting treatment measures of business combinations involving enterprises under common controland business combinations involving enterprises not under common controlBusiness combinations refer to the combination of two or more independent enterprises to form a reporting entityof transactions or events. Business combination can be classified as business combinations involving enterprisesunder common control and business combinations involving enterprises not under common control.
(1) Business combinations involving enterprises under common control
Business combinations under common control means enterprises involved in the business combination are underultimate control by one party or the same multi-parties before and after combination, and such control is nottemporary. For business combinations under common control, those who obtain control of enterprises involved inthe business combination on the combination date are the acquirer while other enterprises involved in the businesscombination are the acquiree. Combination date is the date that the combining party actually obtains control of thecombined party.Assets and liabilities that the acquirer gets from the acquiree are calculated and measured at the book values onthe combination date. If there are differences between the book values of the net assets the acquirer receives andthe book values of the combination consideration it pays (or the face values of the issued shares), the differenceswill be used to adjust capital reserves (share premium). Where capital reserves (share premium) are insufficient tooffset, retained earnings shall be adjusted.All direct expenses related to the business combinations paid by the acquirer shall be included in current profitsand losses upon occurrence.
(2) Business combinations involving enterprises not under common control
Business combinations not under common control means enterprises involved in the business combination are notunder ultimate control by one party or the same multi-parties before and after combination. For businesscombinations not under common control, those who obtain control of enterprises involved in the businesscombination on the acquisition date are the acquirer, while other enterprises involved in the business combinationare the acquiree. Acquisition date is the date that the acquirer actually obtains control of the acquiree.For business combinations not under common control, the costs of combination include the assets the acquirerpays, liabilities the acquirer bears, and the fair value of the equity securities issued on the date of combination forthe acquisition of control over the acquiree. The costs of auditing, legal services, evaluation consulting, otherintermediary expenses and other management fees incurred for business combination shall be included in currentprofits and losses. The transaction costs of the equity securities and debt securities issued by the acquirer shall beincluded in the initially confirmed amounts of equity securities and debt securities. The contingent considerationinvolved shall be included in the costs of business combination based on its fair value at the acquisition date. If,within 12 months after the acquisition, there is new or further evidence for conditions that have already existed onthe acquisition date and the contingent consideration shall be re-adjusted, the combination goodwill shall beadjusted accordingly. The acquirer’s costs of business combinations and its identifiable net assets obtained frombusiness combinations shall be assessed at the fair values on the acquisition date. If the costs of businesscombinations are higher than the identifiable net assets of the acquiree on the acquisition date, the gap between
them shall be confirmed as goodwill. If the costs of business combinations are lower than the fair values of theidentifiable net assets of the acquiree on the acquisition date, the fair values of identifiable assets, liabilities andcontinent liabilities as well as the measurement of combination costs shall be reassessed; if, upon reassessment,the business combination costs are still lower than the fair values of the identifiable net assets of the acquiree, thedifference shall be included in profits and losses of the current period.If the deductible temporary differences the acquirer gets from the acquiree are not eligible to be confirmed asdeferred tax asset on the acquisition date, and within 12 months of the acquisition, there are new or furtherevidence for the conditions that have already existed on the acquisition date that the economic profits brought bythe deductible temporary differences of the acquiree could be achieved, such differences shall be confirmed asdeferred tax asset. At the same time, the goodwill shall be reduced. Where the goodwill is insufficient to bededucted, the gap between them shall be included in current profits and losses. Apart from the aforementionedsituations, all deductible temporary differences confirmed to be relevant to the business combination shall berecorded in current profits and losses.For business combinations not under common control that are achieved through multiple steps, whether they canbe regarded as package deals shall be judged in accordance with Notice No.5 of the Interpretation of AccountingStandards for Business Enterprises of the Ministry of Finance (C.K. [2012] No.19), and the standards of “packagedeals” set out in Article 51 of the Accounting Standard for Business Enterprises No. 33 – Consolidated FinancialStatements (please refer to Note V (6) "methods for preparation of consolidated financial statements" (2)). In theevent that the combination is regarded as "package deals", accounting treatment shall be done by referring to thedescriptions in previous paragraphs of this section and “Note V (22) Long-term equity investments” herein; if not,accounting treatment shall be done by distinguishing individual financial statements from consolidated financialstatements:
In individual financial statements, the initial investment costs shall be the sum of the book value of the equityinvestment of the acquiree held before the acquisition date and the new investment costs on the acquisition date; ifother comprehensive income is involved in the equities of the acquiree before the acquisition date, accountingprocessing shall be done for the comprehensive income related to this investment by adopting the same basis fordirectly disposing of relevant assets or liabilities of the acquiree during the disposal of this investment.In consolidated financial statements, the equities of the acquiree held before the acquisition date shall bere-measured at the fair value of the equities on the acquisition date, and the difference between the fair value andthe book value shall be recognized as the return on investment of the current period; if other comprehensiveincome is involved in the equities of the acquiree before the acquisition date, accounting processing shall be donefor the comprehensive income related to this investment by adopting the same basis for directly disposing ofrelevant assets or liabilities of the acquiree.
6. Methods for preparation of consolidated financial statements
(1) Principles of determining the scope of consolidated financial statements
The scope of consolidation of consolidated financial statements shall be subject to the basis of control. Controlrefers to the power the investor owns against the investee, which allows the investor to enjoy the variable returnby attending relevant activities held by the investee, and to be capable of using such power to affect the amount ofreturn. The scope of consolidation is the Company and all of its subsidiaries. Subsidiaries refer to entitiescontrolled by the Company.The Company shall reassess whether it controls an investee if facts and circumstances indicate that there arechanges to the relevant elements of control as defined above.
(2) Methods for preparation of consolidated financial statements
The Company shall include the subsidiaries in the scope of consolidation from the date it acquires the actualcontrol over the net assets and the decision-making of production and operations of such subsidiaries; accordingly,the Company shall terminate including them in the scope of consolidation from the date it loses the actual control.In terms of subsidiaries already disposed of, the operating results and cash flows before the disposal date havebeen included in the consolidated income statements and the consolidated cash flow statements appropriately; asfor subsidiaries disposed in the current period, the opening balance in the consolidated balance sheet shall not beadjusted. In case of subsidiaries added through business combinations not under the same control, the operatingresults and cash flows after the acquisition date have been included in the consolidated income statements and theconsolidated cash flow statements appropriately, and the opening and comparative balance in the consolidatedbalance sheet shall not be adjusted. In case of subsidiaries added through business combinations under the samecontrol, the operating results and cash flows of the combined party from the beginning of the period in which thecombination happens to the combination date have been included in the consolidated income statements and theconsolidated cash flow statements appropriately, and the comparative balance in the consolidated balance sheetshall be adjusted simultaneously.In case of inconsistencies in the accounting policies or periods between subsidiaries and the Company duringpreparation of consolidated financial statements, financial statements of subsidiaries shall be adjusted according tothe accounting policies and periods adopted by the Company. For subsidiaries acquired by business combinationsnot under the same control, their financial statements shall be adjusted based on the fair value of the identifiablenet assets on the acquisition date.All major business transaction balance, transactions, and unrealized profit of the Company shall be offset duringpreparation of consolidated financial statements.Shareholders’ equities of subsidiaries and the part of the net profit and loss of the current period not attributable tothe Company shall be presented separately under the shareholders’ equities and the net profit in the consolidatedfinancial statements as equities of minority shareholders and minority shareholders’ profits and losses. Shares ofequities of minority shareholders in the net profit and loss of the current period of subsidiaries shall be presentedunder the "minority shareholders’ profits and losses" in the consolidated income statement. If the loss of asubsidiary which is shared by its minority shareholders exceeds the minority shareholders’ share in the openingbalance of the subsidiary, the minority interest shall be reduced.If the Parent Company loses control of a subsidiary due to partial disposal of equity investment or other reasons, itshall re-measure the remaining equity at fair value on the date of loss of control. The sum of considerationobtained from equity disposal and fair value of the remaining equity, minus the difference between the ParentCompany’s share of the subsidiary’s net assets that is continuously calculated from the acquisition date, shall berecognized as investment income for the reporting period when the loss of control takes place. Accountingprocessing shall be done for the other comprehensive income related to this investment in the subsidiary’s equitiesby adopting the same basis for directly disposing of relevant assets or liabilities of the acquiree during the loss ofcontrol (that is, except for the changes caused by re-measurement of the net liabilities or net assets of the definedbenefit plan by the previous subsidiary, others shall be transferred to the return on investment of the currentperiod). After that, subsequent measurement shall be done for the remaining equity of this part as per relevantprovisions in the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment or theAccounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.See "Note V (22) Long-term equity investments" or "Note V (10) Financial instruments" for details.If the Company disposes of investments in a subsidiary’s equities by steps via transactions until it loses control, itshall check whether these transactions from disposal of the investments in the subsidiary’s equities to the loss of
control are package deals. If the terms, conditions, and economic effects of transactions on disposing of equityinvestment in the subsidiary conform to one or more of the following circumstances, that means these multipletransactions should be treated as package deals in accounting processing: 1) Those transactions are reached at thesame time or after taking into consideration the influence of each other; 2) those transactions together produce acomplete commercial outcome; 3) the occurrence of one transaction depends on the occurrence of at least oneother transaction; 4) one transaction alone does not seem to be economical, but all those transactions areeconomical when are considered as a whole. If those transactions are package deals, each transaction shall betreated as a transaction that results in loss of control of the subsidiary in accounting processing. However, thedifference between each disposal price before loss of control and the Parent Company’s share of the subsidiary’snet assets corresponding to the disposal investment shall be recognized as other comprehensive income in theconsolidated financial statements and, upon loss of control, transferred to the profit and loss of the currentreporting period.
7. Classification of joint operation arrangements and accounting treatment methods for joint operationsNone
8. Criteria for recognition of cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits that can be used for payment at any time, and short-term(due within three months from the acquisition date) investment held by the Company with high liquidity, easy toconvert to cash in a known amount, and small risk of value changes.
9. Translation of transactions and financial statements denominated in foreign currencies
(1) Methods for translation of transactions denominated in foreign currencies
At the initial recognition of foreign currency transactions of the Company, foreign currency will be translated intothe amount of standard currency for accounting at the spot exchange rate or its approximate exchange rate on thetransaction date. However, the business of exchange of foreign currencies or transactions related to the exchangeof foreign currencies, foreign currency will be translated into the amount of standard currency for accounting atthe exchange rate actually adopted.
(2) Methods for translation of monetary and non-monetary items in foreign currenciesOn the balance sheet date, the foreign currency monetary items are translated at the spot exchange rate on thatdate. Exchange difference resulting from the difference between the spot exchange rate on the balance sheet dateand that at the initial recognition or on the previous balance sheet date shall be recognized as the profit and loss ofthe current period.Non-monetary items that are measured at historical cost in foreign currencies shall still be converted at the spotexchange rate on the transaction date with the amount of standard currency for accounting unchanged.Non-monetary items that are measured at fair value in foreign currencies are translated using the foreign exchangerate at the date the fair value is recognized. The difference between the amount of standard currency foraccounting after translation and the original amount of the standard currency for accounting shall be treated as achange in fair value (including the change in the exchange rate) and recognized as the profit and loss of thecurrent period or other comprehensive income.
(3) Methods for translation of foreign-currency financial statements
Foreign-currency financial statements of overseas operations shall be translated into RMB financial statements by
the following methods: The assets and liabilities in the balance sheet shall be converted at the spot exchange rateon the balance sheet date; except "undistributed profits", all the other owner’s equity items are converted at thespot exchange rate at the time of occurrence. Income and expense items in the income statement shall betranslated using the foreign exchange rates ruling at the dates of the transactions. The undistributed profit at thebeginning of the year is the previous year’s undistributed profit at the end of the year after conversion; theundistributed profit at the end of the period is allocated and recognized to each item according to the convertedprofits; the difference between the total of asset and liability items and shareholders’ equity items after conversionis considered as foreign currency translation difference and recognized as other comprehensive income.Translation of comparative financial statements shall be subject to the above provisions.
10. Financial instruments
When the Company becomes a party to a financial instrument contract, the financial instrument is confirmed to beeither financial assets or financial liabilities.
(1) Classification, recognition, and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics offinancial assets, the Company classified financial assets into the following categories: financial assets measured atthe amortized cost, financial assets measured at fair value through other comprehensive income and financialassets measured at fair value through profit and loss of the current period.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit and loss of the current period, transaction costs are directly included in profit and loss of the currentperiod. For other types of financial assets, related transaction costs are included in their initial recognized amounts.In terms of the accounts receivable or notes receivable arising from selling products or providing labor servicewithout or not considering major financing component, the Company shall regard the expected considerationamount that it has rights to charge as the initial recognition amount.
1) Financial assets measured at amortized cost
For the business model where the Company manages the financial assets carried at amortized cost, the Companyaims to charge the contract cash flows, and the characteristics of the contract cash flows of this kind of financialassets are consistent with the basic lending arrangements. That is, cash flows generated on specified dates aresolely payments of principal and interest on the principal amount outstanding. This kind of financial assets aresubsequently measured at amortized cost using the effective interest method. Gain or loss arising fromamortization or impairment is recognized in profit and loss of the current period.
2) Financial assets measured at fair value through other comprehensive income
The business model for the Company to manage this type of financial assets aims at both obtaining the contractcash flows and selling the financial assets, and the characteristics of the contract cash flows of this kind offinancial assets are consistent with the basic lending arrangements. The Company measures this kind of financialassets at fair value through other comprehensive income, but recognizes the impairment losses or gains, exchangeprofit and loss, and interest income calculated by the effective interest method as the profit and loss of the currentperiod.Additionally, the Company designates some non-tradable equity instruments as financial assets at fair valuethrough other comprehensive income. The Company recognizes relevant dividend income from such financialassets as the profit and loss of the current period, and changes in fair value as other comprehensive income. Whensuch financial assets are derecognized, the accumulated gains or losses previously recognized as othercomprehensive income shall be transferred from other comprehensive income to retained earnings and not
recognized as the profit and loss of the current period.
3) Financial assets measured at fair value through profit and loss of the current periodAll financial assets other than the other two preceding types are classified as financial assets measured at fairvalue through profit and loss of the current period. Moreover, at initial recognition, to eliminate or significantlyreduce accounting mismatches, the Company may designate some financial assets as financial assets measured atfair value through profit and loss of the current period. Such financial assets shall be measured at fair value, andchanges in fair value are recognized as the profit and loss of the current period.
(2) Classification, recognition, and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities measured at fair value throughprofit or loss and other financial liabilities. For financial liabilities at fair value through profit and loss of thecurrent period, transaction costs are directly included in profit and loss of the current period. For other types offinancial liabilities, related transaction costs are included in their initial recognized amounts.
1) Financial liabilities measured at fair value through profit and loss of the current periodFinancial liabilities measured at fair value through profit and loss of the current period include tradable financialliabilities (including derivatives belonging to financial liabilities) and financial liabilities designated to bemeasured at fair value through profit and loss of the current period at initial recognition.Tradable financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fairvalue, and changes in fair value -- except for those related to hedging accounting -- are recognized as profit andloss of the current period.For those that are designated as financial liabilities measured at fair value through profit or loss, the changes infair value resulting from changes in the credit risk of the Company shall be recognized as other comprehensiveincome; besides, when such liabilities are derecognized, the amount of accumulative changes in fair valueresulting from credit risk changes that are recognized as other comprehensive income shall be transferred toretained earnings. Other changes in fair value shall be recognized as the profit and loss of the current period. If thetreatment of the credit risk changes in such financial liabilities by the above methods will result in expansion ofthe accounting mismatch in the profit and loss, the Company shall recognize all gains or losses in such financialliabilities (including the amount subject to the credit risk changes of the Company) as the profit and loss of thecurrent period.
2) Other financial liabilities
Except for financial liabilities resulting from financial asset transfers not meeting the conditions for derecognitionor the continuous involvement in the transferred financial asset, or financial guarantee contracts, other financialliabilities shall be classified into the financial liabilities measured at amortized cost, which shall be subsequentlymeasured at amortized cost, and the gains or losses resulting from derecognition or amortization shall berecognized as the profit and loss of the current period.
(3) Recognition basis and measurement method of financial asset transfer
Once one of the following conditions is met, the financial assets shall be derecognized: 1) The contract right tocharge the cash flows of the financial assets is terminated; 2) the financial assets have been transferred, and almostall the risks and rewards of the ownership of the financial assets are transferred to the transferee; 3) the financialassets have been transferred, and the Company has given up the control over the financial assets although it doesnot transfer or retain almost all the risks and rewards of the ownership of the financial assets.If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of thefinancial assets, and the Company does not waive its control of the financial assets, it shall recognize the relevantfinancial assets within the extent of its continuous involvement in the transferred financial assets and recognizethe relevant liabilities. The continuous involvement in the transferred financial assets refers to the level of risk
with which the Company is faced due to changes in the financial asset values.When overall transfer of financial assets meets the conditions for derecognization, the book value of thetransferred financial assets and the difference between the consideration received due to transfer and theaccumulative changes in fair value that is originally recognized as other comprehensive income shall berecognized as the profit and loss of the current period.When partial transfer of financial assets meets the conditions for derecognization, the book value of thetransferred financial assets shall be apportioned to the fair value between the derecognized part and the recognizedpart, and the consideration received due to transfer and the difference between the accumulative changes in fairvalue that is originally recognized as other comprehensive income, which shall be apportioned to the derecognizedpart, and the apportioned book value as mentioned above shall be recognized as the profit and loss of the currentperiod.When the Company sells financial assets with additional recourse or transfers the endorsed financial assets held, itshall check whether almost all the risks and rewards of the ownership of the financial assets are transferred. If theCompany has transferred almost all the risks and rewards of the ownership of the financial assets to the transferee,it shall derecognize the financial assets; if the Company retains almost all the risks and rewards of the ownershipof the financial assets, it shall not derecognize the financial assets; if the Company neither transfers nor retainsalmost all the risks and rewards of the ownership of the financial assets, it shall judge whether it has retainedcontrol over the assets and conduct accounting processing following the principles described in previousparagraphs.
(4) Derecognition of financial liabilities
If current obligations of the financial liabilities (or some of the liabilities) have been released, the Company shallderecognize the financial liabilities (or some of the liabilities). Where the Company (borrower) and a lender signan agreement to replace the existing financial liability by way of assumption of new financial liability with theterms of the new financial liability substantially different from those of the existing financial liability, itderecognizes the existing financial liability while recognizing the new financial liability. If the contract terms ofthe existing financial liability are materially changed in whole (or in part), the existing financial liability will bederecognized, and the financial liability after changes of terms will be recognized as a new financial liability.If a financial liability is derecognized in whole (or in part), the difference between the book value of thederecognized portion and the consideration paid (including the non-cash assets transferred out or the new financialliability assumed) is recognized as the profit and loss of the current period.
(5) Offsetting financial assets and financial liabilities
When the Company has the statutory right to offset the recognized amount of financial assets and financialliabilities, and this statutory right is currently enforceable, and the Company plans to net the financial assets orsimultaneously realize the financial assets and pay off the financial liabilities, the financial assets and financialliabilities are presented in the balance sheet at the net amount after offsetting each other. Otherwise, financialassets and financial liabilities are presented separately in the balance sheet and are not offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilitiesThe fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. If there are active markets for a financialinstrument, the Company establishes its fair value by using quotes in the active markets. Quotes in active marketsrefer to prices that are readily available on a regular basis from exchanges, brokers, trade associations, pricingservice institutions, etc., and represent the prices of market transactions that actually occur in a fair trade. If thereis no active market, the Company establishes fair value by using valuation techniques. Valuation techniquesinclude reference to price used in recent market transactions between knowledgeable, willing parties, reference to
the current fair value of other financial instruments that are substantially the same, discounted cash flow analysis,option pricing models, etc. During valuation, the Company adopts the valuation techniques that are applicableunder current circumstances and supported by sufficient available data and other information, selects the inputvalues that are consistent with the characteristics of the assets or liabilities considered by the market participantsin the transaction of the relevant assets or liabilities, and preferentially uses the relevant observable inputs.Unobservable input values are used where the relevant observable input values are not available or are notpracticable.
(7) Equity instruments
An equity instrument refers to a contract that can prove the Company owns the remaining equity in the assets afterdeducting all liabilities. The Company’s issuance (including refinancing), repurchase, sales or cancellation ofequity instruments are treated as changes in equities, and transaction costs related to equity transactions arededucted from equities. The Company does not recognize changes in the fair value of equity instruments.The distribution of dividends by equity instruments (including “interests” generated by instruments that areclassified as equity instruments) during their period existence shall be treated as profit distribution.
(8) Impairment of financial assets
The financial assets for which the Company needs to recognize impairment losses are financial assets measured atamortized cost, debt instrument investments measured at fair value through other comprehensive income, andlease receivables, mainly including notes receivable, accounts receivable, and other receivables. In addition, forsome financial guarantee contracts, impairment reserves are set aside and credit impairment losses are recognizedas per the accounting policies described in this section.
1) Methods for recognizing impairment reserves
Based on the expected credit loss, the Company sets aside provisions for impairment of the above items bymethods (general method or simplified method) for measuring expected credit loss applicable to them andrecognizes credit impairment loss.Credit loss refers to the difference between all contract cash flow receivables discounted at the original effectiveinterest rate under the contract and all expected cash flow receivables, i.e., the present value of all cash shortages.Specifically, for financial assets that have been credit-impaired at the time of purchase or origin, the Companydiscounts the financial assets at the credit-adjusted actual interest rate.The general method for measuring expected credit loss means that the Company assesses on each balance sheetdate whether the credit risk of financial assets has increased significantly since the initial recognition. If yes, theCompany measures loss reserves at an amount equivalent to the expected credit loss in the entire duration; if not,the Company measures loss reserves at an amount equivalent to the expected credit loss in the next 12 months.The Company considers all reasonable and evidence-based information, including forward-looking information,when assessing expected credit loss;As for financial instruments with low credit risk on the balance sheet date, the Company measures the lossreserves according to the expected credit loss in the future 12 months, assuming that its credit risk has had nosignificant increase since its initial recognition. The Company chooses to measure loss reserves according to theexpected credit loss in the next 12 months or in the entire duration based on whether the credit risk has increasedsignificantly since initial recognition.
2) Standards for judging whether credit risk has increased significantly since initial recognitionIf the probability of default (PD) of a financial asset in the expected duration recognized on the balance sheet dateis significantly higher than that in the expected duration recognized at the time of initial recognition, the creditrisk of the financial asset has increased significantly. Except for special circumstances, the Company determineswhether credit risk has increased significantly since initial recognition by reasonably assessing the changes in the
PD in the entire duration with the changes in the coming 12 months.
3) Portfolio method for assessing expected credit risk based on portfolios
The Company assesses individual credit risk of financial assets with significantly different credit risks. Examplesinclude the following: receivables from related parties; receivables that have disputes with counterparties or thoseinvolved in litigation or arbitration; there are obvious signs that the debtor is very unlikely to fulfill the repaymentobligation.In addition to financial assets whose individual credit risk is assessed, the Company divides financial assets intodifferent groups based on common risk characteristics, and assesses credit risk on a portfolio basis.
4) Accounting treatment methods for impairment of financial assets
At the end of the reporting period, the Company calculates the expected credit loss of financial assets. If theexpected credit loss is greater than the book value of its current impairment provisions, the difference isrecognized as an impairment loss; if it is less than the current book value of the impairment provisions, thedifference is recognized as impairment gains.
5) Methods for recognizing credit losses of financial assets
a. Notes receivableThe Company measures loss reserves for notes receivable at an amount equivalent to expected credit loss in theentire duration. The Company divides notes receivable into different portfolios based on their credit riskcharacteristics:
| Item | Basis for determining the portfolio |
| Banker’s acceptance | Acceptors are banks with low credit risks. |
Trade acceptance
| Trade acceptance | The aging of trade acceptance is used as credit risk characteristics. |
b. Accounts receivableThe Company measures loss reserves for accounts receivable without major financing component at an amountequivalent to expected credit loss in the entire duration.The Company measures loss reserves for accounts receivable and lease receivables with major financingcomponent at an amount equivalent to expected credit loss in the duration.Except for accounts receivable whose individual credit risk is assessed, the Company divides accounts receivableinto different portfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Aging portfolio | This portfolio uses aging of accounts receivable as credit risk characteristics. |
| Related party portfolio | This portfolio comprises amounts of related parties within the consolidated scope. |
c. Other receivablesThe Company adopts the amount equivalent to the expected credit loss in the coming 12 months or in the entireduration to measure impairment losses based on whether the credit risk of other receivables has increasedsignificantly since initial recognition. Except for other receivables whose individual credit risk is assessed, theCompany divides other receivables into different portfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
Aging portfolio
| Aging portfolio | This portfolio uses aging of other receivables as credit risk characteristics. |
| Portfolio based on related parties | This portfolio comprises amounts of related parties within the consolidated scope. |
11. Notes receivable
For details, please refer to 10. Financial instruments in V. Significant Accounting Policies and Accounting Estimates of Section X.
12. Accounts receivable
For details, please refer to 10. Financial instruments in V. Significant Accounting Policies and Accounting Estimates of Section X.
13. Accounts receivable financing
None
14. Other receivables
Recognition methods and accounting treatment methods for expected credit loss in other receivablesFor details, please refer to 10. Financial instruments in V. Significant Accounting Policies and Accounting Estimates of Section X.
15. Inventories
(1) Classification of inventories
Inventories mainly include raw materials, goods in process, materials for consigned processing, commodity stocks,packages, and low-value consumables.
(2) Pricing methods for inventory acquisition and delivery
Inventories are priced at actual cost when they are acquired. Inventory costs include procurement costs,processing cost, and other costs. Inventories are priced by the weighted average method during receipt anddelivery.
(3) Methods for recognition of the net realizable value of inventories and the provisions for impairment ofinventoriesThe net realizable value refers to the amount of the estimated selling price of the inventory minus the estimatedcost, estimated selling expenses, and related taxes and fees at the time of completion in daily activities. Whenrecognizing the net realizable value of inventories based on the substantial evidence obtained, the Company alsoconsiders the purpose of holding the inventories and the impact on matters after the balance sheet date.On the balance sheet date, inventories are measured at the lower of costs and the net realizable value. When thenet realizable value is lower than costs, the Company sets aside provisions for inventory impairment. Provisionsfor inventory impairment are set aside based on the difference between the cost of individual inventory item andits net realizable value. For inventories with a large quantity but a low unit value, provisions for inventoryimpairment are set aside according to inventory category.After provisions for the inventory impairment are set aside, if the influencing factors in previous write-down ofthe inventory value disappear, causing the net realizable value of the inventory to be higher than its book value, itshall be reversed within the amount of the provisions for inventory impairment that have been set aside andrecognized as the profit and loss of the current period.
(4) The perpetual inventory system is adopted for the inventories.
(5) Amortization method for low-value consumables and packages
The one-time amortization method is adopted for low-value consumables and packages upon receipt.
16. Contract assets
The Company recognizes the contract amounts where the customer has not paid the consideration but theCompany has fulfilled its contractual obligation while the claim to the amount from the customer is notunconditional (i.e. Only dependent on the passage of time) as contract assets in the balance sheet. Contract assetsand contract liabilities under the same contract are presented on a net basis; contract assets and contract liabilitiesunder different contracts are not offset.
17. Contract costs
If the incremental cost incurred by the Company for obtaining a contract is expected to be recovered, the cost ofobtaining the contract is recognized as an asset. However, if the amortization period of the asset does not exceedone year, it is included into the profit and loss of the period as it occurs.If the contract cost does not fall within other enterprise accounting standards than the Accounting Standards forBusiness Enterprises No. 14 -- Revenue and meet the following conditions at the same time, it is considered ascontract performance cost and recognized as asset: 1) the cost is directly related to an existing or expected contractincluding direct labor, direct material or manufacturing overhead (or similar expenses), or the cost has beenexpressly defined as borne by the customer, or the cost is incurred solely as a result of the contract; 2) the costincreases the Company’s future resources to perform contractual obligations; and 3) the cost is expected to berecovered.Contract cost-related assets are amortized on the same basis of goods revenue recognition relating to the asset andincluded in the profit and loss of the current period.
18. Assets held for sale
The Company classifies non-current assets or a disposal group as held for sale (including exchange ofnon-monetary assets with commercial substance, the same below) if their book values are recovered principallythrough disposal rather than through continuing use. Specifically, the following conditions shall be metsimultaneously: A certain non-current asset or disposal group can be sold immediately under the currentconditions according to the practice of selling such assets or disposal groups in similar transactions; the Companyhas made a resolution of an offer and obtained the purchase commitment; the sale is expected to be completedwithin one year. Among them, the disposal group refers to a group of assets that are disposed of as a wholethrough sale or other means in a transaction, and the liabilities directly related to these assets that are transferred inthe transaction. If the asset group or the combination of asset groups to which the goodwill (obtained frombusiness combination) has been allocated in accordance with the Accounting Standards for Business EnterprisesNo. 8 -- Impairment of Assets, the disposal group shall include the goodwill allocated to it.During initial measurement or re-measurement of the non-current assets and disposal groups classified intoheld-for-sale assets on the balance sheet date, if the book value of such assets is higher than the net valuededucting the cost of offer, the book value is written down to the recoverable amount by the Company, thewritten-down amount is recognized as profit and loss of the current period and impairment provisions are set asideat the same time. For the disposal group, the recognized asset impairment loss is first deducted from the bookvalue of the goodwill in the disposal group, and then deducted in proportion from the book value of non-currentassets specified in the applicable Accounting Standards for Business Enterprises No. 42 - Non-Current Assets andDisposal Groups Held for Sale and Discontinued Operations (hereinafter referred to as the "Standards for AssetsHeld for Sale"). If the fair value of the disposal group held for sale on the subsequent balance sheet date increases
after deducting the selling expenses, the previously written down amount shall be restored, and reversed withinthe amount of the asset impairment losses recognized for non-current assets as per the Standards for Assets Heldfor Sale applicable after the assets are classified into those held for sale, and the reversed amount shall berecognized as the profit and loss of the current period. Besides, the book value of the reversed amount shall beincreased in proportion according to the proportion of the book value of the non-current assets specified in theStandards for Assets Held for Sale applicable to those except for the goodwill in the disposal group. The bookvalue of the goodwill that has been deducted, and the asset impairment losses recognized before the non-currentassets are classified into assets held for sale as per the Standards for Assets Held for Sale shall not be reversed.Non-current assets held for sale and non-current assets in the disposal group are not subject to depreciation oramortization. Interest and other expenses on liabilities in the disposal group held for sale continue to berecognized.When the non-current assets or disposal group no longer meets the conditions for classification into the assets heldfor sale, the Company no longer classifies them into the category or removes the non-current assets from thedisposal group held for sale, and measures them at the lower of the following two: (1) in terms of the book valuebefore classification into assets held for sale, for which the measurement standard is the amount after adjustmentaccording to the depreciation, amortization, or impairment that should have been recognized under the assumptionthat they are not classified into assets held for sale; and (2) the recoverable amount.
19. Investments in creditor’s rights
None
20. Other investments in creditor’s rights
None
21. Long-term receivables
None
22. Long-term equity investments
The long-term equity investments herein refer to the long-term equity investments in which the Company hascontrol, joint control, or significant influence on the investee. Long-term equity investments where the Companyhas no control, joint control, or significant influence on the investee are accounted as financial assets measured atfair value through profit and loss of the current period. Among them, for those that are non-tradable, the Companymay choose to designate them as the financial assets measured at fair value through other comprehensive incomefor accounting during initial recognition. See "Note V (10)" for their detailed accounting policies.Joint control refers to the common control over a particular arrangement according to relevant agreement, and thatthe decisions on relevant activities under such arrangement are subject to the unanimous consent from the partiessharing the joint control. Significant influence means having the power to participate in the financial andoperating policy decision-making of the investee, but cannot control or, together with other parties, jointly controlthe formulation of these policies.
(1) Determination of investment cost
For long-term equity investments obtained from combination of enterprises under common control, the share of
the combined party’s owner’s equity in the book value of the consolidated financial statements of the finalcontrolling party which is acquired on the combination date shall be regarded as the initial investment cost forlong-term equity investments. The capital reserves shall be adjusted if there is difference between the initialinvestment cost of long-term equity investment and the cash paid, the transferred non-cash assets, and the bookvalue of the debts assumed; if the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Ifthe equity securities issued are used as the combination consideration, the share of the combined party’s owner’sequity in the book value of the consolidated financial statements of the final controlling party which is acquired onthe combination date shall be regarded as the initial investment cost for long-term equity investments; the totalbook value of the shares issued shall be the share capital; the capital reserves shall be adjusted if there isdifference between the initial investment cost of long-term equity investments and the total book value of theshares issued; if the capital reserves are insufficient to balance the difference, retained earnings shall be adjusted.For long-term equity investments obtained from combination of enterprises under different control, thecombination costs on the acquisition date shall be used as the initial investment costs of the long-term equityinvestment; the combination costs include the sum of the assets paid by the acquirer, the liabilities incurred orassumed, and the fair value of the equity securities issued.Intermediary expenses such as auditing, legal services, assessment and consulting and other related managementexpenses incurred by the combining party or acquirer for the business combination shall be recognized as theprofit and loss of the current period.Other equity investments except for long-term equity investments formed via business combination are initiallymeasured at cost. Subject to the way the long-term equity investments are obtained, the costs shall be recognizedbased on the cash actually paid by the Company for acquisition, the fair value of the equity securities issued bythe Company, the value agreed in the investment contract or agreement, the fair value or original book value of theassets swapped out in a non-monetary asset exchange transaction, and the fair value of the long-term equityinvestment itself. Expenses, taxes, and other necessary expenditures directly related to acquisition of long-termequity investments are also recognized as investment costs.
(2) Subsequent measurement and recognition of profit and loss
If the Company has common control or significant influence over the investee (except for constitutingco-proprietors), the long-term equity investment shall be accounted for by using the equity method. Additionally,the Company’s financial statements apply the cost method for long-term equity investments that can make controlin the investee
1) Long-term equity investments accounted for using the cost method
When the cost method is used, the long-term equity investments are calculated according to the initial investmentcost. In the event that the investment is added or recovered, the cost of the long-term equity investments shall beadjusted. With the exception of the price actually paid at the acquisition of investment or cash dividends or profitsincluded in consideration, declared but not issued yet, the return on investment of the current period shall berecognized according to the cash dividends or profits declared to be issued by the investee.
2) Long-term equity investments accounted for using the equity method
When using equity method, if the initial investment cost of long-term equity investments is greater than the fairvalue share of the identifiable net assets entitled of the investee at the time of investment, the initial investment ofthe long-term equity investments shall not be adjusted. If the initial investment cost of long-term equityinvestments is lower than the fair value share of the identifiable net assets entitled of the investee at the time ofinvestment, the difference shall be recognized as profit and loss of the current period and the cost of the long-termequity investments shall be adjusted at the same time.When the equity method is used, return on investment and other comprehensive income shall be respectively
determined based on the share of net profit or loss and other comprehensive income realized by the investee thatshall be attributable or assumed, and the book value of long-term equity investments shall be adjusted at the sametime. Attributable share shall be calculated based on the profit or cash dividends declared by the investee and thebook value of long-term equity investments shall be accordingly decreased. In respect to other changes of owner’sequity of the investee in addition to net profit or loss, other comprehensive income and profit distribution, thebook value of long-term equity investments shall be adjusted and recognized as capital surplus. When confirmingthe share of the investee’s net profit and loss, the Company shall confirm the investee’s net profit after adjustmentbased on the fair value of the identifiable net assets of the investee at the acquisition of the investment. Where theaccounting policy and accounting period adopted by the investee differs from those of the Company, the investee’sfinancial statements shall be adjusted according to the Company’s accounting policy and accounting period, andthe return on investment and other comprehensive income shall be recognized accordingly. Where the transactionsare between the Company and the associates and joint ventures, and the assets that are invested or sold do notconstitute business, unrealized internal transaction profits and losses incurred between the Company and theassociates and joint ventures shall be offset with the part attributable to the Company which is calculated on a duepro-rata basis, and the return on investment shall be recognized on this basis. However, unrealized internaltransaction losses incurred between the Company and the investees shall not be offset if they fall under theimpairment losses on assets transferred.When confirming the limit of net loss incurred by the investee, the limit is the extent that the book value of thelong-term equity investments and other long-term equity that substantially constitutes a net investment in theinvestment target is written down to zero. Additionally, if the Company has obligations to assume additionallosses of the investee, provisions are recognized according to the expected obligation, and recognized asinvestment losses for the period. Where the investee records net profit in the future, the Company resumes andrecognizes the profit-sharing amount after such amount makes up the unrecognized loss-sharing amount.
23. Investment property
Measurement model for investment propertyMeasurement by the cost methodDepreciation or amortization method
Investment properties are real estate held to generate rental income or earn capital gains or both. Investmentproperties include land use rights leased out, land use rights held for transfer after appreciation, buildings leasedout, etc.Investment property is initially measured at cost. Subsequent costs are included in the investment property’s costonly when it is probable that future economic benefits associated with the item will flow to the Company and thecost of the item can be measured reliably. Other subsequent costs are recognized as profit and loss of the currentperiod when incurred.The Company adopts the cost model for subsequent measurement of investment property, and depreciates oramortizes it according to policies consistent with those for buildings or land use rights.Impairment test method and impairment provision method for investment property are detailed in "Note V (31)Long-term asset impairment".Investment properties are derecognized when they are disposed of or permanently withdrawn from use and it isexpected that no economic benefit can be generated from its disposal. The income from selling, transferring,writing off or destroying investment property, less its book value and relevant taxes and fees, is recognized asprofit and loss of the current period.
24. Fixed assets
(1) Recognition conditions
Fixed assets are tangible assets with a useful life of more than one accounting year that are held for production or supply of goods orlabor services, for rental to third parties, or for use in the organizations. Fixed assets shall only be recognized when relevanteconomic interest may flow into the Company and costs thereof can be reliably measured. Fixed assets shall be initially measured atcost and by taking into account the impact of estimated disposal expense.
(2) Depreciation method
| Category | Depreciation method | Depreciation life | Residual value rate | Annual depreciation rate |
| Properties and buildings | Straight-line depreciation | 10 to 30 years | 5%. 10% | 3.00%, 3.17% to 9.00%, 9.50% |
| Equipment | Straight-line depreciation | 2 to 20 years | 5%. 10% | 4.50%, 4.75% to 45.00%, 47.50% |
| Motor vehicles | Straight-line depreciation | 5 to 14 years | 5%. 10% | 6.43%, 6.79% to 18.00%, 19.00% |
| Office equipment | Straight-line depreciation | 3 to 8 years | 5%. 10% | 11.25%, 11.88% to 30.00%, 31.67% |
| Production equipment | Straight-line depreciation | 2 to 5 years | 5%. 10% | 18.00%, 19.00% to 45.00%, 47.50% |
Estimated residual value refers to the current amount where, supposed the service life of a fixed asset has expiredand it is in the expected status of such expiration, the Company obtains from the disposal of such asset after theestimated disposal expense is deducted.
(3) Determination basis, pricing method and depreciation method of fixed assets acquired under financeleases: Not applicable
25. Construction work in process
Construction work in progress is measured at actual project expenditure, comprising project expenditure incurredduring construction and other necessary cost incurred.The Company’s Construction work in progress is transferred to fixed assets when the assets are ready for theirintended use. If the fixed assets under construction have reached the expected usable status but have not yetcompleted the final account for completed project, they shall be recognized as fixed assets according to theestimated value, and accrue depreciation. After the completion of the final account for completed project, theoriginal estimated value is adjusted according to the actual cost, but the original accrued depreciation amount isnot adjusted.Impairment test method and impairment provision method for Construction work in progress are detailed in "NoteV (31) Long-term asset impairment".
26. Borrowing costs
Borrowing costs include interest on borrowings, amortizations of discounts or premiums, incidental expenses,exchange difference resulting from foreign-currency borrowings, etc. The borrowing costs that can be directlyattributable to the acquisition, construction or production of an asset eligible for capitalization shall be capitalizedif the capital expenditures have been incurred, the borrowing costs have been incurred, or the necessary purchase,construction or production activities to make the asset reach the expected available or marketable state have begun.When the assets with the purchase, construction or production meeting the capitalization conditions reach theexpected available or marketable state, they cease to be capitalized. Any other borrowing costs are recognized asan expense in the period when they are incurred.The amount of interest that shall be capitalized is determined based on the interest expenses incurred in the periodwhen a specifically borrowed fund is obtained less any income earned on the unused borrowing fund as a depositin a bank or as a temporary investment. Where funds are borrowed for a general purpose, the amount of interestthat shall be capitalized is determined by multiplying the part of the accumulative asset disbursements in excess ofthe weighted average asset disbursement for the specifically borrowed fund by the capitalization rate of thegeneral borrowing used. The capitalization rate is the weighted average interest rates applicable to thegeneral-purpose borrowings.During the capitalization, all exchange differences arising from earmarked foreign-currency borrowings shall becapitalized; exchange differences arising from general-purpose foreign-currency borrowings shall be recognizedas profit and loss of the current period.Assets eligible for capitalization refer to assets such as fixed assets, investment real estates and inventories thatcan reach the expected available or marketable status after a long period of purchase, construction or productionactivities.If the acquisition, construction or production of an asset eligible for capitalization is continuously suspended forover three months for abnormal reasons, capitalization of the borrowing costs shall be suspended, until theacquisition, construction or production of the asset is resumed.
27. Biological assets
None
28. Oil & gas assets
None
29. Right-of-use assets
Impairment test method and impairment provision method for right-of-use assets are detailed in "Note V (42)Leases".
30. Intangible assets
(1) Pricing method, service life, and impairment test
Intangible assets refer to identifiable non-monetary assets without physical substance owned or controlled by the
Company.Intangible assets are initially measured at cost. Costs of intangible assets are included in intangible assets’ bookvalue, only when it is probable that future economic benefits associated with the item will flow to the Companyand the cost of the item can be measured reliably. Other costs of intangible assets are recognized as profit and lossof the current period when incurred.Land use rights acquired are generally accounted for as intangible assets. With respect to self-built buildingsincluding plants, the relevant land use right expenses and buildings’ construction costs are accounted for asintangible assets and fixed assets, respectively. For purchased houses and buildings, the price paid is distributedbetween the land use right and the building. If it is difficult to distribute, it shall all be included in fixed assets.From the beginning of use of intangible assets with finite service life, the accumulated amount of the originalvalue less estimated net residual value and the provisions for asset impairment set aside shall be amortized evenlyin stages by straight-line method over their service life. Intangible assets with uncertain service lives are notamortized.The Company reviews the service life and amortization method of intangible asset with finite service life at theend of the reporting period, and a change therein (if any) shall be accounted for as a change in accountingestimates. Additionally, the Company reviews the service life and amortization method of intangible asset withuncertain service life. If there is evidence that the period when it brings economic benefits to the enterprise isforeseeable, its service life shall be estimated and it is amortized according to the amortization policy forintangible assets with finite service life.
(2) Accounting policy for expenditure on internal research and developmentThe Company classifies the expenditure on an internal research and development project into expenditure on theresearch phase and expenditure on the development phase.Expenditure on the research phase is recognized as profit and loss of the current period when incurred.Expenditure on the development phase is recognized as intangible asset when all the following criteria are met,while expenditure in the development phase that does not meet the following criteria is recognized as profit andloss of the current period when incurred:
1) technically feasible to complete the intangible asset so that it will be available for use or sale;
2) the intention to complete the intangible asset and use or sell it;
3) how the intangible asset will generate probable future economic benefits. Among other things, the Companycan demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if itis to be used internally, the usefulness of the intangible asset;
4) the availability of adequate technical, financial and other resources to complete the development and the abilityto use or sell the intangible asset;
5) the ability to measure reliably the expenditure attributable to the intangible asset during the development.Where the expenditure on research and development incurred cannot be classified into the expenditure on researchphase or the expenditure on development phase, it shall be recognized as profit and loss of the current periodwhen incurred.
31. Long-term asset impairment
The Company determines on the balance sheet date whether there is any indication that the non-current andnon-financial assets may have been impaired, including fixed assets, construction work in progress, intangible
assets with limited service life, and investment properties measured using the cost model, and long-term equityinvestments in subsidiaries, joint ventures and associates. If there is any indication that the asset is likely to beimpaired, the Company will estimate the recoverable amount and carry out the impairment test. Impairment testsshall be conducted each year for goodwill and intangible assets with uncertain service life and not yet in use,whether or not there is any indication of impairment.If an impairment test shows that the recoverable amount of an asset is lower than its book value, the difference isrecognized as a provision for impairment and recognized as the impairment loss. The recoverable amount isdetermined based on the higher of the net amount of the fair value of the asset minus the disposal expenses andthe present value of the expected future cash flow of the asset. The fair value of asset is determined according tothe price of the sales agreement in fair trade. If there is no sales agreement but an active market for the asset, thefair value is determined according to the price offered by the buyer for the asset. If there is neither sales agreementnor active market for the asset, the fair value of the asset shall be estimated based on the best informationavailable. The disposal costs include legal fees, relevant taxes and fees, as well as handling fees related to thedisposal of asset, and the direct costs incurred to ensure the asset reaches the marketable state. The present valueof the expected future cash flow of an asset shall be determined by the discounted cash at an appropriate discountrate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset.Provisions for asset impairment are calculated and recognized on an individual basis. If it is difficult to estimatethe recoverable amount of individual assets, the Company will determine the recoverable amount of the assetgroup on the basis of the asset group to which the asset belongs. Asset group refers to the smallest asset portfoliowhich can independently generate cash inflows.When an impairment test is performed on the goodwill separately listed in the financial statement, book value ofsuch goodwill is apportioned to the asset group or combination of asset groups that can benefit from the synergyeffect of business combination. If the test result shows that the recoverable amount of the asset group orcombination of asset groups is lower than their book value, corresponding impairment losses on goodwill will berecognized. The impairment loss shall first offset against the book value of goodwill that is apportioned to assetgroup or a combination of asset groups, and then offset against the book value of assets excluding goodwill in theasset group or the combination of asset groups on a pro-rata basis according to the proportion of their book value.Once the aforementioned asset impairment loss is recognized, it will not be reversed in subsequent accountingperiods even if the value can be recovered.
32. Long-term unamortized expenses
Long-term unamortized expenses are expenses which have been incurred but shall be amortized over a periodlonger than one year, including the reporting period and the future periods. Long-term unamortized expenses ofthe Company mainly include office building decoration costs, sewage use rights and electricity use rights.Long-term unamortized expenses shall be amortized based on the straight-line method over the expected benefitperiod.
33. Contract liabilities
A contract liability is the Company’s obligation to transfer goods to a customer for which the Company hasreceived consideration from the customer. If the customer has paid contract consideration or the Company hasobtained the unconditional right of collection before the Company transfer goods to the customer, the amountreceived or the receivable is recognized as contract liability at the earlier of the time when the customer actual
pays the amount and when the amount becomes due. Contract assets and contract liabilities under the samecontract are presented on a net basis; contract assets and contract liabilities under different contracts are not offset.
34. Employee remuneration
(1) Accounting treatment method for short-term remuneration
Short-term remuneration includes salaries, bonuses, allowances and subsidies, employee welfare, medicalinsurance fees, maternity insurance fees, employment injury insurance fees, housing provident funds, labor unionfees, staff education funds, and non-monetary welfare. The Company shall, within the accounting period when itsemployees provide service, recognize actual short-term remuneration as liabilities which shall be recognized asprofit and loss of the current period or relevant asset costs. Wherein, non-monetary benefits are measured at fairvalue.
(2) Accounting treatment method for post-employment benefits
Post-employment benefit includes basic endowment insurance, unemployment insurance, etc. It also includesdefined contribution plans. Where defined contribution plans are adopted, the corresponding amount payable shallbe recognized as profit and loss of the current period or relevant asset costs in which it is incurred.
(3) Accounting treatment method for dismissal benefits
If the Company terminates the labor relationship with an employee before the employee’s labor contract expires,or proposes to give the employee compensation for encouraging the employee to voluntarily accept dismissal, theliabilities arising from the compensation giving to the employee for the termination of the labor relationship withthe employee shall be recognized as profit and loss of the current period, when the Company cannot unilaterallywithdraw the termination of the labor relationship plan or the dismissal proposal, or when it recognizes the costsrelated to the restructuring of the payment of the dismissal benefits, whichever is earlier. However, if it is expectedthat the dismissal benefits cannot be paid in full within twelve months after the end of the annual reporting period,they shall be accounted for according to other long-term employee remunerations.Internal retirement schemes for employees shall be accounted for following the same principles of the abovedismissal benefits. Where the salaries and social insurance fees of early retirees to be paid by the Company fromthe date when employees stop providing services to the normal retirement date meet the recognition conditions forprojected liabilities, they shall be recognized as profit and loss of the current period.
(4) Accounting treatment method for other long-term employee benefits
Other long-term benefits provided by the Company to employees that meet the conditions of the definedcontribution plan are accounted for in accordance with the defined contribution plan; other long-term benefits areaccounted for in accordance with the defined benefit plan.
35. Lease liabilities
Recognition and accounting treatment methods of lease liabilities are detailed in "Note V (42) Leases".
36. Provision
An obligation related to contingent issues and meeting the following conditions shall be deemed a provision: (1)such an obligation is a current one assumed by the Company; (2) fulfilling such an obligation might causeeconomic benefits to flow out of the Company; and (3) the amount of such an obligation is measurable reliably.On the balance sheet date, a provision is measured at the best estimate of the expenditure required to settle therelated present obligation, with comprehensive consideration of factors such as the risks, uncertainty and timevalue of money relating to a contingency.A provision is separately recognized as an asset and the recognized compensation amount shall not exceed thebook value of the provision, when all or part of the expenses required to pay off the provision are expected to becompensated by a third party and the amount of compensation is basically determined to be receivable.
37. Share-based payment
Share-based payment is the transaction made through granting equity instruments or bearing the liabilitiesrecognized based on such instruments in exchange for services rendered by employees or other parties. TheCompany’s share-based payment includes equity-settled share-based payment and cash-settled share-basedpayment.
(1) Equity-settled share-based payment
Where the share payment is settled through equity for acquisition of service from employees, it shall be measuredat the fair value of the equity instruments granted to the employees. If the right cannot be exercised until thevesting period ends or until the prescribed performance conditions are met, the amount of such fair value shall,based on the best estimate of the number of vested equity instruments, be recognized as the relevant costs orexpenses by straight-line method; if the right can be exercised immediately following the grant, the amount ofsuch fair value shall be recognized as the relevant costs or expenses on the grant date, and the capital reserve shallbe increased accordingly.On each balance sheet date within the vesting period, the Company carries out the best estimation based on suchfollow-up information such as the variation of the number of vested staff acquired recently, and revises thenumber of estimated vested equity instruments. The impact of the above estimates shall be recognized as therelevant costs or expenses of the current period, and the capital reserve shall be adjusted accordingly.For an equity-settled share-based payment in return for the service of any other party, if the fair value of theservice of any other party can be reliably measured, it shall be measured at the fair value of the service of anyother party on the acquisition date; if the fair value of the service of any other party cannot be reliably measured,but the fair value of the equity instruments can be reliably measured, it shall be measured at the fair value of theequity instruments on the acquisition date and included in the relevant costs or expenses, and the shareholders’equity shall be increased correspondingly.
(2) Cash-settled share payment
The cash-settled share-based payment shall be measured at the fair value of the Company’s liabilities determinedbased on shares or other equity instruments. If the right may be exercised immediately after the grant, relevantcosts or expenses shall be recognized the grant date, and the liabilities shall be increased accordingly. If the rightmay not be exercised until the vesting period ends or until the specified performance conditions are met, on eachbalance sheet date within the vesting period, the services obtained in the current period shall, based on the bestestimate of the information about the exercisable right, be recognized as the relevant costs or expenses at the fairvalue of the liability undertaken by the Company, and liabilities shall be increased accordingly.
The fair value of liabilities is re-measured and any change thereto is recognized as profit and loss of the currentperiod on each balance sheet date and settlement date prior to settlement of the relevant liabilities.
38. Preference shares, perpetual bonds and other financial instruments
None
39. Revenue
Accounting policy for recognition and measurement of revenueRevenue is the total inflow of economic benefits unrelated to the capital invested by the shareholders which areformed in the daily activities of the Company and can lead to an increase in shareholders’ equity. The revenue isrecognized when the customers take control of the relevant goods (including services, same for below) if thecontract between the Company and the customers meet all the following conditions: 1) the parties to the contracthave approved such contract and undertake to perform their respective obligations; 2) the contract has specifiedthe rights and obligations of the parties thereto and in connection with the transfer of goods or provision of laborservices; 3) the contract sets out clear payment terms related to the transfer of goods; 4) the contract hascommercial substance, meaning that the performance thereof will change the risk, time distribution or amount ofthe Company’s future cash flow; 5) the Company is very likely to recover the consideration obtained bytransferring goods to customers. Wherein, taking control of relevant goods means being able to control the use ofthe goods and obtain almost all economic benefits therefrom.On the enforcing date of the contract, the Company identifies all individual performance obligations in thecontract, and apportions the transaction price to each individual performance obligation according to the relativeproportion of the individual selling price of the goods. When determining the transaction price, the Company hasconsidered the impact of such factors including variable consideration, major financing component of the contract,non-cash consideration, and consideration payable to the customer.With respect to each individual performance obligation of the contract, the Company will recognize thetransaction price apportioned to such obligation as revenue based on the progress of performance during therelevant performance periods, if any of the following conditions is met: 1) the customer obtains and consumes theeconomic benefits brought by the Company’s performance during such performance; 2) the customer can controlthe goods in progress during the Company’s performance; 3) the goods produced from the Company’sperformance has irreplaceable use, and in respect of the portion of revenue arising from the Company’sperformance completed to date, the Company is entitled to collect revenue during the entire validity period of thecontract. The progress of performance is determined according to the nature of the transferred goods using theinput or output method. When such progress cannot be reasonably determined, if the costs incurred are expectedto be compensated, the Company recognizes revenue based on the amount of costs incurred, until the progress ofperformance can be reasonably determined.If none of the aforesaid conditions is met, the Company will recognize the transaction price apportioned to suchindividual performance obligation when the customer obtains the control over relevant goods. To decide whetherthe customer has obtained the control over goods, the Company takes into account the following indications: 1)the enterprise has the present right to collection for the goods, meaning the customer bears the present obligationto payment for the goods; 2) the enterprise has passed the legal title to the goods to the customer, meaning thecustomer has had the legal title to the goods; 3) the enterprise has transferred the physical possession of the goodsto the customer, meaning the customer has had the physical possession of the goods; 4) the enterprise has
transferred the major risks and remunerations concerning the title to the goods to the customer, meaning thecustomer has obtained the major risks and remunerations concerning the title to the goods; 5) the customer hasaccepted the goods; 6) other indications to show that the customer has obtained the control over the goods.Generally, the Company’s business of goods selling only comprises the performance obligation of transferring thegoods. The control of the goods is transferred when they are sent out and the Company receives the signed receiptand other documents from the customer, so the Company confirms the realization of revenue at that point in time.The discounts, rewards and other arrangements in some contracts between the Company and customers constitutevariable consideration. The Company uses the expected value method or the most likely amount to determine thebest estimates for variable consideration, but the transaction price containing variable consideration shall notexceed the amount of cumulatively recognized revenue that is unlikely to have major reversals when the relevantuncertainties are eliminated.Different business models are adopted for different businesses, which may lead to the differences in the accounting policy forrecognition of revenue.None
40. Government grants
Government grants are monetary or non-monetary assets acquired by the Company from the government free ofcharge, excluding the capital invested by the government as an investor and granted corresponding owner’s equity.Government grants are classified into government grants related to assets and government grants related toincome. The Company defines the government grants for purchasing or constructing or otherwise forminglong-term assets as asset-related government grants; other government grants are defined as the income-relatedgovernment grants. Government grants shall be measured at the amount received or receivable if they aremonetary assets. Non-monetary government grants shall be measured at fair value; if the fair value cannot bereliably obtained, they shall be measured at the nominal amount. The government grants measured at the nominalamount shall be directly recognized as the profit and loss of the current period.Asset-related government grants are recognized as deferred income, and included in the profit and loss of thecurrent period in stages according to a reasonable and systematic method over the service life of the relevantassets. The income-related government grants shall be recognized as deferred income if they are used tocompensate relevant expenses or losses in subsequent periods, and shall be recognized as profit and loss of thecurrent period during the recognition of related expenses; the grants used to compensate related expenses or lossesalready incurred shall be directly recognized as profit and loss of the current period.The government grants related to both assets and income shall be accounted for by distinguishing different parts;if it is difficult to distinguish, they shall be, as a whole, classified as income-related government grants.Government grants related to the Company’s daily activities shall be recognized as other profit and loss or writedown relevant costs according to the essence of economic business; those unrelated to the Company’s dailyactivities shall be recognized as non-operating income and expenditure.If the recognized government grants need to be returned and there is relevant deferred income balance, the bookbalance of relevant deferred income shall be written off, and the excess shall be recognized as profit and loss ofthe current period; otherwise, government grants shall be directly recognized as profit and loss of the currentperiod.
41. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
On the balance sheet date, the Company measures a current tax liability (or asset) arising from the current andprior periods based on the amount of income tax expected to be paid by the Company (or returned by tax authority)calculated by related tax laws. The taxable income which is the basis for calculation of the current income tax iscalculated after appropriate adjustments to the pretax accounting profits for the reporting period.
(2) Deferred income tax assets and deferred income tax liabilities
For the difference between the book value of certain assets and liabilities and their tax bases, and the temporarydifferences between the book values and the tax bases of items, of which the tax bases can be determined for taxpurposes according to the tax laws but which have not been recognized as assets and liabilities, the Companyrecognizes deferred income tax assets and deferred income tax liabilities using the balance sheet debt method.Where the taxable temporary differences arise from the initial recognition of goodwill and the initial recognitionof an asset or liability arising from the transaction that is not a business combination, nor, at the time of thetransaction, affects neither accounting profit and taxable profit (or deductible loss), the relevant deferred incometax liability shall not be recognized. Additionally, in respect of taxable temporary difference associated withinvestments in subsidiaries, joint ventures and associates, where the Company can control the timing of thereversal of the temporary differences and it is probable that the temporary differences will not be reversed in theforeseeable future, the relevant deferred income tax liability shall not be recognized. Other than the aboveexceptions, the Company shall recognize deferred income tax liabilities arising out from all other taxabletemporary differences.Where the deductible temporary differences arise from the initial recognition of an asset or liability arising fromthe transaction that is not a business combination, nor, at the time of the transaction, affects neither accountingprofit and taxable profit (or deductible loss), the relevant deferred income tax liability shall not be recognized.Additionally, in respect of deductible temporary difference associated with investments in subsidiaries, jointventures and associates, where it is probable that the temporary differences will not be reversed in the foreseeablefuture or taxable profit will not be available against which the deductible temporary differences can be utilized inthe future, the relevant deferred income tax liability shall not be recognized. Other than the above exceptions, theCompany recognizes a deferred tax asset for other deductible temporary differences, to the extent that it isprobable that future taxable profit will be available against which the deductible temporary differences can beutilized.The tax effects of deductible losses and taxes available for carrying over are recognized as an asset when it isprobable that future taxable profits would be available against which these losses can be utilized.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to applyto the period when the asset is realized or the liability is settled, according to the requirements of tax laws.The book value of deferred tax assets is reviewed at the balance sheet date and written down to the extent that it isno longer probable that sufficient taxable profit will be available in future periods to allow the deferred tax assetsto be utilized. Such write-down is reversed when it becomes probable that sufficient taxable profits will beavailable.
(3) Income tax expenses
Income taxes comprise current income tax and deferred income tax.The current income tax and deferred income tax expense or income is recognized as the profit and loss of thecurrent period except that the current income tax and deferred income tax is related to transactions or events,which are recognized as other comprehensive income or directly recognized as shareholders’ equity, and thus
recognized as other comprehensive income or shareholders’ equity, and that the book value of goodwill is adjusteddue to deferred income tax arising from business combination.
42. Leases
A lease is a contract whereby the Company assigns or acquires the right to control the use of one or moreidentified assets for a specified period in exchange for or with payment of consideration. The Company evaluateswhether a contract is a lease or contains a lease at its inception date.
(1) The Company as the lessee
Main types of assets leased by the Company are properties and buildings.
i. Initial measurementExcept for short-term leases or low-value asset leases, the Company recognizes the right to use the leased assetduring the lease term as a right-of-use asset and recognizes the present value of unpaid lease payments as a leaseliability. When calculating the present value of lease payments, the Company adopts the interest rate implicit inthe lease as the discount rate; if the interest rate implicit in the lease cannot be determined, the lessee’sincremental borrowing rate is used as the discount rate.
ii. Follow-up measurementThe Company depreciates the right-of-use assets with reference to relevant depreciation provisions specified inthe Accounting Standards for Business Enterprises No. 4 - Fixed Assets (see "Note IV ((15) Fixed Assets"). If it isreasonably ascertained that the ownership of the asset will be transferred to the lessee at the end of the lease term,then depreciation period runs to the end of the useful life of the lease asset. If it cannot be reasonably ascertainedthat the ownership of the leased asset will be transferred to the lessee at the end of the lease term, thendepreciation period runs to the earlier of the end of the useful life of the asset or the end of the lease term.For lease liabilities, the Company calculates its interest expenses in each period of the lease term at a fixedperiodic interest rate which is included in the profit and loss of the current period. Variable lease payments that arenot included in the measurement of lease liabilities are included in the current profit and loss when they areactually incurredAfter the commencement date of the lease term, when there is a change in the actual fixed payment amount, achange in the estimated payable amount of the guaranteed residual value, a change in the index or ratio used todetermine the lease payment amount, or a change in the evaluation results or actual exercise of the purchaseoption, renewal option or termination option, the Company re-measures the lease liability according to the presentvalue of the changed lease payments and adjusts the book value of the right-of-use asset accordingly. If the bookvalue of the right-of-use asset has been reduced to zero but the lease liability still needs to be further reduced, theCompany includes the remaining amount in the profit and loss of the current period.iii. Short-term leases and low-value asset leasesFor short-term leases (leases with a term of not more than 12 months since the lease commencement date) andlow-value asset leases Lease liabilities, the Company adopts a simplified approach, i.e. Not recognizing asright-of-use assets but as the cost of the related asset or as profit and loss of the current period in accordance withthe straight-line method or other systematically reasonable methods during each period of the lease.
(2) The Company as the lessor
On the lease commencement date, the company divides leases into finance leases and operating leases based onthe substance of the transaction. Leases of assets where substantially all the risks and rewards of ownership havebeen transferred are classified as finance leases. Other leases than the finance leases are classified as operating
leases.i. Operating leaseThe Company adopts the straight-line method to recognize lease receipts from operating leases as rental incomefor each period of the lease term. Variable lease payments related to operating leases that are not included in leasereceipts are included in the current profit and loss when they are actually incurred.ii. Finance leaseThe company recognizes the finance lease receivables and derecognizes the finance lease assets on thecommencement date of the lease term. The financial lease receivables are initially measured by the net investmentin the lease (the sum of the unguaranteed residual value and the present value of the lease receipts not yet receivedat the beginning of the lease term, discounted at the interest rate implicit in the lease), while interest income iscalculated and recognized according to the fixed periodic interest rate in each period of the lease term. Variablelease payments obtained by the Company that are not included in the measurement of the net value of leaseliabilities are included in the current profit and loss when they are actually incurred.
(1) Accounting treatment method for operating lease: Not applicable
(2) Accounting treatment method for finance lease: Not applicable
43. Other important accounting policies and accounting estimates
None
44. Significant changes of accounting policies and accounting estimates
(1) Significant changes of accounting policies
√ Applicable □ Not applicable
| Contents and reasons for changes to accounting policies | Approval procedure | Remarks |
| On December 12, 2018, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 -- Leases (C.K. [2018] No. 35) (hereinafter referred to as the “New Lease Standards”), requiring that enterprises listed both within the borders and abroad as well as enterprises listed abroad and adopting IFRS or Accounting Standards for Business Enterprises to prepare financial statements should implement these revised Standards from January 1, 2019; other enterprises listed within China shall implement these revised Standards from January 1, 2021. | On May 21, 2021, the Company convened the 5th meeting of the fifth session of the Board of Directors and the 3rd meeting of the fifth session of the Board of Supervisors, and approved the Proposal on Changes to Accounting Policies. | Details can be found in the Announcement on Changes to Accounting Policies (Announcement No.: 2021-76) dated May 22, 2021 on CNINFO (http://www.cninfo.com.cn) . |
1) Accounting policy changes resulted from the execution of the New Revenue StandardsOn December 7, 2018, the Ministry of Finance issued the revised Accounting Standards for Business EnterprisesNo. 21 -- Leases (C.K. [2018] No. 35) (hereinafter referred to as the “New Lease Standards”). As passed under aresolution at the 5th meeting of the fifth session of the Board of Directors on May 21, 2021, the Company started
to enforce the aforesaid New Lease Standards from January 1, 2021 and adjusted related accounting policiesaccordingly.Pursuant to the New Lease Standards, for contracts that already exist prior to the enforcement of the newstandards, the Company chooses not to re-evaluate whether they are a lease or contain a lease.The Company only adjusts the cumulative impact number for lease contracts that have been yet been completed asof January 1, 2021. The amounts of retained earnings and other relevant items in the financial statements at thebeginning of the period for the first time adoption of the new standards (i.e. January 1, 2021) are adjusted basedon the accumulative impact amount at the first time adoption, while comparative financial information for theprevious accounting periods is not adjusted.The Company’s specific processing and its impact on the date of fist-time adoption of the new standards (i.e.January 1, 2021) are as follows:
A. The Company as the lessee:
For finance leases on the adoption date of the new standards, if the Company is the lessee, it measures theright-of-use assets and lease liabilities according to the original book value of the financial leased assets and thefinancial lease payables. For operating leases on the adoption date of the new standards, the Company, as thelessee, measures lease liabilities according to the present value of the remaining lease payments discounted at theincremental borrowing rate on the adoption date of the new standards; the unpaid rent accrued on an accrual basisunder the original lease standards is included in the remaining lease payments.For operating leases prior to the adoption date of the new standards, the Company measures the right-of-use assetbased on the amount equal to the lease liability and makes necessary adjustments based on prepaid rents. TheCompany conducts an impairment test on the right-of-use assets on the adoption date and adjusts the book valueof the right-of-use assets.For operating leases where the leased assets belong to low-value assets prior to the adoption date, the Companydoes not recognize as right-of-use assets and lease liabilities For operating leases other than low-value asset leasesat the adoption date, the Company applies one or more of the following simplified treatments for each lease:
·Leases to be completed within 12 months of the adoption date are treated as short-term leases;·When measuring lease liabilities, the same discount rate is used for leases with similar characteristics;·The measurement of the right-of-use assets excludes initial direct costs;·If there is an option to renew or terminate the lease, the Company determines the lease term based on theactual exercise of the option before the adoption date and other latest conditions;·If there is a lease change before the adoption date, the company will carry out accounting treatmentaccording to the final arrangement of the lease change.B. Main changes and impacts of the implementation of the New Lease StandardsThe houses and buildings leased by the company were originally treated as operating leases. According to the newstandards, on January 1, 2021, the Company recognized right-of-use assets of RMB 12,852,715.53, leaseliabilities of RMB 8,089,819.67, and non-current liabilities due within one year of RMB 4,762,895.86.Impacts on the financial statements dated January 1, 2021 are listed in the following:
| Statement item | Amount on December 31, 2020 (prior to change) | Amount on January 1, 2021 (after change) | ||
| Consolidated statement | Parent Company’s statement | Consolidated statement | Parent Company’s statement | |
| Right-of-use assets | 12,852,715.53 | 3,161,008.25 | ||
| Lease liabilities | 8,089,819.67 | 1,858,811.04 | ||
| Non-current liabilities due | 4,762,895.86 | 1,302,197.21 | ||
within one year
The weighted average of the incremental borrowing rate used by the Company on its lease liabilities in its balancesheet dated January 1, 2021 is 4.75%.The adjustment process for the difference between the unpaid minimum lease payments for major operating leasesat the end of 2020 as disclosed in its 2020 annual financial statements and those included in lease liabilities onJanuary 1, 2021 is as follows:
| Item | Consolidated statement | Parent Company’s statement |
| Minimum lease payments of major operating leases at December 31, 2020 | 14,874,019.59 | 3,189,784.64 |
| Less: Lease payments with simplified treatment | 1,295,863.18 | |
| Including: Short-term lease | 1,295,863.18 | |
| Low-value asset lease | ||
| Adjusted minimum lease payments of major operating leases at January 1, 2021 | 13,578,156.41 | 3,189,784.64 |
| Weighted average of incremental borrowing rates | 4.75% | 4.75% |
| Balance of lease liabilities on January 1, 2021 | 12,852,715.53 | 3,161,008.25 |
| Including: Lease liabilities due within one year | 4,762,895.86 | 1,302,197.21 |
(2) Significant changes of accounting estimates
□ Applicable √ Not applicable
(3) Description on the adjustment of relevant items in the financial statements at the beginning of the yearfor the first time adoption of the new leasing standards since 2021
√ Applicable □ Not applicable
Whether to adjust the subjects of the balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
| Item | December 31, 2020 | January 01, 2021 | Adjustment number |
| Current assets: | |||
| Monetary funds | 1,125,196,199.56 | 1,125,196,199.56 | |
| Settlement reserve | |||
| Lending to banks and other financial institutions | |||
| Tradable financial assets | |||
| Derivative financial assets |
| Notes receivable | 724,419.74 | 724,419.74 | |
| Accounts receivable | 1,051,423,939.59 | 1,051,423,939.59 | |
| Accounts receivable financing | |||
| Prepayments | 26,819,108.57 | 26,819,108.57 | |
| Premium receivable | |||
| Reinsurance payables | |||
| Reinsurance contract reserves receivable | |||
| Other receivables | 15,824,945.56 | 15,824,945.56 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets held under resale agreements | |||
| Inventory | 1,661,274,495.32 | 1,661,274,495.32 | |
| Contract assets | |||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 | |
| Non-current assets due within one year | |||
| Other current assets | 101,584,569.30 | 101,584,569.30 | |
| Total current assets | 4,039,920,737.33 | 4,039,920,737.33 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in creditor’s rights | |||
| Investments in other creditor’s rights | |||
| Long-term receivable | |||
| Long-term equity investment | |||
| Investment in other equity instruments | |||
| Other non-current financial assets |
| Investment property | 34,575,365.94 | 34,575,365.94 | |
| Fixed assets | 2,792,587,302.21 | 2,792,587,302.21 | |
| Construction work in progress | 275,904,617.95 | 275,904,617.95 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | 12,852,715.53 | 12,852,715.53 | |
| Intangible assets | 169,355,772.24 | 169,355,772.24 | |
| Development expenses | |||
| Goodwill | 64,654.15 | 64,654.15 | |
| Long-term deferred expenses | 26,635,983.14 | 26,635,983.14 | |
| Deferred income tax assets | 111,367,362.66 | 111,367,362.66 | |
| Other non-current assets | 28,027,952.15 | 28,027,952.15 | |
| Total non-current assets | 3,438,519,010.44 | 3,451,371,725.97 | 12,852,715.53 |
| Total assets | 7,478,439,747.77 | 7,491,292,463.30 | 12,852,715.53 |
| Current liabilities: | |||
| Short-term borrowings | 142,942,941.34 | 142,942,941.34 | |
| Borrowings from PBC | |||
| Placements from banks and other financial institutions | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 234,887,563.22 | 234,887,563.22 | |
| Accounts payable | 761,519,389.26 | 761,519,389.26 | |
| Payments received in advance | |||
| Contract liabilities | 137,333,617.40 | 137,333,617.40 | |
| Proceeds from financial assets sold under repo | |||
| Customer bank deposits and due to banks and other |
| financial institutions | |||
| Funds from securities trading agency | |||
| Funds from securities underwriting agency | |||
| Employee remuneration payable | 123,524,627.11 | 123,524,627.11 | |
| Tax and fees payable | 112,608,054.87 | 112,608,054.87 | |
| Other payables | 754,844,580.09 | 754,844,580.09 | |
| Including: Interests payable | |||
| Dividends payable | 1,437,466.77 | 1,437,466.77 | |
| Transaction fee and commission receivable | |||
| Reinsurance payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 4,762,895.86 | 4,762,895.86 | |
| Other current liabilities | 17,628,086.63 | 17,628,086.63 | |
| Total current liabilities | 2,285,288,859.92 | 2,290,051,755.78 | 4,762,895.86 |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 8,089,819.67 | 8,089,819.67 | |
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 115,101,158.13 | 115,101,158.13 | |
| Deferred income tax | 35,903,653.30 | 35,903,653.30 |
| liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 151,004,811.43 | 159,094,631.10 | 8,089,819.67 |
| Total liabilities | 2,436,293,671.35 | 2,449,146,386.88 | 12,852,715.53 |
| Owner’s equity: | |||
| Share capital | 1,311,487,077.00 | 1,311,487,077.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 907,006,505.05 | 907,006,505.05 | |
| Less: Treasury shares | 96,480,911.29 | 96,480,911.29 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 61,469,258.27 | 61,469,258.27 | |
| General reserves | |||
| Retained earnings | 2,858,664,147.39 | 2,858,664,147.39 | |
| Total equity attributable to owners of the parent company | 5,042,146,076.42 | 5,042,146,076.42 | |
| Equities of minority shareholders | |||
| Total owner’s equity | 5,042,146,076.42 | 5,042,146,076.42 | |
| Total liabilities and owners’ equities | 7,478,439,747.77 | 7,491,292,463.30 | 12,852,715.53 |
Explanation of adjustment
The Company started to adopt the New Lease Standards from January 1, 2021.
Balance sheet of the Parent Company
Unit: RMB
| Item | December 31, 2020 | January 01, 2021 | Adjustment number |
| Current assets: | |||
| Monetary funds | 170,229,178.13 | 170,229,178.13 | |
| Tradable financial assets |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 92,647,372.33 | 92,647,372.33 | |
| Accounts receivable financing | |||
| Prepayments | 7,940,396.34 | 7,940,396.34 | |
| Other receivables | 136,987,584.64 | 136,987,584.64 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventory | 156,605,546.36 | 156,605,546.36 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 52,517,725.87 | 52,517,725.87 | |
| Total current assets | 616,927,803.67 | 616,927,803.67 | |
| Non-current assets: | |||
| Investments in creditor’s rights | |||
| Investments in other creditor’s rights | |||
| Long-term receivable | |||
| Long-term equity investment | 1,928,113,219.50 | 1,928,113,219.50 | |
| Investment in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 17,939,329.51 | 17,939,329.51 | |
| Fixed assets | 257,354,688.59 | 257,354,688.59 | |
| Construction work in progress | |||
| Productive biological assets |
| Oil & gas assets | |||
| Right-of-use assets | 3,161,008.25 | 3,161,008.25 | |
| Intangible assets | 25,205,232.21 | 25,205,232.21 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | |||
| Deferred income tax assets | 46,811,106.77 | 46,811,106.77 | |
| Other non-current assets | 2,619,959.27 | 2,619,959.27 | |
| Total non-current assets | 2,278,043,535.85 | 2,281,204,544.10 | 3,161,008.25 |
| Total assets | 2,894,971,339.52 | 2,898,132,347.77 | 3,161,008.25 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 420,061,168.44 | 420,061,168.44 | |
| Payments received in advance | |||
| Contract liabilities | 17,388,431.01 | 17,388,431.01 | |
| Employee remuneration payable | 44,678,713.21 | 44,678,713.21 | |
| Tax and fees payable | 5,995,417.05 | 5,995,417.05 | |
| Other payables | 126,072,040.24 | 126,072,040.24 | |
| Including: Interests payable | |||
| Dividends payable | 1,437,466.77 | 1,437,466.77 | |
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 1,302,197.21 | 1,302,197.21 | |
| Other current liabilities | 2,260,496.03 | 2,260,496.03 | |
| Total current liabilities | 616,456,265.98 | 617,758,463.19 | 1,302,197.21 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 1,858,811.04 | 1,858,811.04 | |
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 5,855,467.25 | 5,855,467.25 | |
| Deferred income tax liabilities | 7,202,336.33 | 7,202,336.33 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 13,057,803.58 | 14,916,614.62 | 1,858,811.04 |
| Total liabilities | 629,514,069.56 | 632,675,077.81 | 3,161,008.25 |
| Owner’s equity: | |||
| Share capital | 1,311,487,077.00 | 1,311,487,077.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 831,693,206.19 | 831,693,206.19 | |
| Less: Treasury shares | 96,480,911.29 | 96,480,911.29 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 61,347,923.99 | 61,347,923.99 | |
| Retained earnings | 157,409,974.07 | 157,409,974.07 | |
| Total owner’s equity | 2,265,457,269.96 | 2,265,457,269.96 | |
| Total liabilities and owners’ equities | 2,894,971,339.52 | 2,898,132,347.77 | 3,161,008.25 |
Explanation of adjustmentThe Company started to adopt the New Lease Standards from January 1, 2021.
(4) Description on the retrospective adjustment of previous comparable data at the first time adoption ofthe new leasing standards in 2021
□ Applicable √ Not applicable
45. Others
NoneVI. Taxes
1. Main tax types and tax rates
| Tax | Tax basis | Tax rate |
| Value-added tax | Taxable VAT (calculated based on the difference of deducting the amount of input tax which is allowed to be deducted in the current period from the result of multiplying taxable sales by applicable tax rate) | 13%, 9% |
| City construction and maintenance tax | Turnover tax paid | 5%, 7% |
| Corporate income tax | Taxable income | 15%, 16.5%, 20%, 25%, progressive rate |
| Education surcharges | Turnover tax paid | 3% |
| Local education surcharges | Turnover tax paid | 2% |
Description of disclosure if different income tax rates apply to different corporate taxpayers
| Name of taxpayer | Income tax rate |
| C&S Paper Co., Ltd., Zhongshan Zhongshun Trading Co., Ltd., C&S (Hubei) Paper Co., Ltd., Zhejiang Zhongshun Paper Co., Ltd., Chengdu Zhongshun Paper Co., Ltd., Hangzhou Jie Rou Trading Co., Ltd., Beijing C&S Paper Co., Ltd., Sun Daily Necessities Co., Ltd., C&S (Dazhou) Paper Co., Ltd., Shanghai Huicong Paper Co., Ltd., Yunfu Hengtai Trading Co., Ltd., and C&S (Jiangsu) Paper Co., Ltd. | 25% |
| C&S (Zhongshan) Paper Co., Ltd., Xiaogan C&S Trading Co., Ltd., Beijing Bloomage Jierou Biotechnology Co., Ltd., Dolemi Sanitary Products Co., Ltd., Luzhou Dolemi Sanitary Products Co., Ltd., Mianyang Dolemi Sanitary Products Co., Ltd., Zhengzhou Dolemi Sanitary Products Co., Ltd., Dazhou Dolemi Sanitary Products Co., Ltd., Guiyang Dolemi Sanitary Products Co., Ltd., Zhanjiang Dolemi Sanitary Products Co., Ltd., and Xi’an Dolemi Sanitary Products Co., Ltd. | 20% |
| Zhong Shun International Co., Ltd., and C&S Hong Kong Co., Ltd. (Note 1) | 16.50% |
| Jiangmen Zhongshun Paper Co., Ltd., C&S (Sichuan) Paper Co., Ltd., and C&S (Yunfu) Paper Co., Ltd. | 15% |
| C&S (Macao) Co., Ltd. (Note 2) | Progressive rate |
2. Tax incentive
C&S (Sichuan) Paper Co., Ltd. was certified as a high-tech enterprise of Sichuan Province in 2020 and wasawarded the Certificate of High-tech Enterprise (No. GR202051001193) in September, 2020, with a valid term ofthree years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2021.C&S (Yunfu) Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in 2020 and wasawarded the Certificate of High-tech Enterprise (No. GR202044006774) in December, 2020, with a valid term ofthree years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2021.Jiangmen Zhongshun Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in 2021 andwas awarded the Certificate of High-tech Enterprise (No. GR202144006582) in December 2021, with a validterm of three years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2021.In accordance with relevant provisions of the Announcement of the State Administration of Taxation on IssuesConcerning the Implementation of the Inclusive Income Tax Deduction and Exemption Policies for SmallLow-profit Enterprises (STA Doc. [2019] No. 2), the policy on inclusive income tax deduction and exemption forsmall low-profit enterprises is applicable to C&S (Zhongshan) Paper Co., Ltd., Xiaogan C&S Trading Co., Ltd.,Beijing Bloomage Jierou Biotechnology Co., Ltd., Dolemi Sanitary Products Co., Ltd., Luzhou Dolemi SanitaryProducts Co., Ltd., Mianyang Dolemi Sanitary Products Co., Ltd., Zhengzhou Dolemi Sanitary Products Co., Ltd.,Dazhou Dolemi Sanitary Products Co., Ltd., Guiyang Dolemi Sanitary Products Co., Ltd., Zhanjiang DolemiSanitary Products Co., Ltd., and Xi’an Dolemi Sanitary Products Co., Ltd. in 2021. To be specific, the annualtaxable income of these enterprises that is not more than RMB1 million shall be included in their taxable incomeat the reduced rate of 25%, with the applicable corporate income tax rate of 20%; and the annual taxable incomethat is not less than RMB1 million nor more than RMB3 million shall be included in their taxable income at thereduced rate of 50%, with the applicable enterprise income tax rate of 20%.
3. Others
Note 1: C&S Hong Kong Co., Ltd. is a Hong Kong-based company incorporated according to the laws of HongKong, and adopts the tax laws thereof. The tax rate for its income tax is 16.50%.Note 2: C&S (Macao) Co., Ltd. is a Macao-based company incorporated according to the laws of Macao. Itscomplementary tax adopts a progressive rate (tax on taxable income that is less than MOP300,000 is exempted,and the taxable income that is more than MOP300,000 is taxed at 12%).VII. Notes to Items of the Consolidated Financial Statements
1. Monetary fund
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Cash on hand | 46,249.83 | 36,349.55 |
| Bank deposits | 795,982,835.01 | 1,047,785,634.71 |
| Other monetary funds | 79,023,408.28 | 77,374,215.30 |
| Total | 875,052,493.12 | 1,125,196,199.56 |
| Including: Total deposits in overseas banks | 187,577,086.41 | 99,311,423.25 |
Other description
Balance of other monetary funds at the end of the reporting period is the security deposit for issuing letters ofcredit and bank acceptance bill and balance of Alipay. Refer to "Note VII (81)" for circumstances whereownership of monetary funds is restricted.
2. Tradable financial assets: None
3. Derivative financial assets: None
4. Notes receivable
(1) Notes receivable presentation by category
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Bank acceptance bill | 2,327,060.20 | 724,419.74 |
| Total | 2,327,060.20 | 724,419.74 |
Description of reason for the portfolio:
If the bad debt reserve of notes receivable is set aside according to general model of expected credit loss, please refer to thedisclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
(2) Bad debt reserve that is set aside, recovered or transferred back in the reporting period: NoneWherein, the amount of recovered or transferred back bad debt reserve in the reporting period is important:
□ Applicable √ Not applicable
(3) Notes receivable that the Company has pledged at the end of the reporting period: None
(4) Notes receivable that the Company has endorsed or discounted at the end of the reporting period andare not due on the balance sheet date: None
(5) Notes that are transferred to notes receivable because the drawer does not perform the contract at theend of the reporting period: NoneOther description
1. The Company has no pledged notes receivable as at the end of the year.
2. The Company has no derecognized notes receivable that are endorsed or discounted but not due as at the end
of the year.
3. The Company has no notes that are transferred to notes receivable because the drawer does not perform the
contract as at the end of the year.
(6) Notes receivable actually written off in the reporting period: None
5. Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Category | Balance at the end of the period | Balance at the beginning of the period | ||||||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Accounts receivable for which bad debt reserve is set aside individually | 41,279,711.95 | 3.37% | 15,136,103.86 | 36.67% | 26,143,608.09 | 34,567,651.21 | 3.17% | 10,681,068.59 | 30.90% | 23,886,582.62 |
| Including: | ||||||||||
| Accounts receivable for which bad debt reserve is set aside in portfolios | 1,183,699,791.69 | 96.63% | 32,012,000.50 | 2.70% | 1,151,687,791.19 | 1,054,953,298.93 | 96.83% | 27,415,941.96 | 2.60% | 1,027,537,356.97 |
| Including: | ||||||||||
| Portfolio based on aging | 1,183,699,791.69 | 96.63% | 32,012,000.50 | 2.70% | 1,151,687,791.19 | 1,054,953,298.93 | 96.83% | 27,415,941.96 | 2.60% | 1,027,537,356.97 |
| Total | 1,224,979,503.64 | 100.00% | 47,148,104.36 | 3.85% | 1,177,831,399.28 | 1,089,520,950.14 | 100.00% | 38,097,010.55 | 3.50% | 1,051,423,939.59 |
Bad debt reserve set aside individually: 15,136,103.86
Unit: RMB
| Name | Balance at the end of the period | |||
| Book balance | Impairment provision | Ratio of provision | Reason for provision | |
| Institution 1 | 28,208,040.02 | 8,218,072.46 | 29.13% | It is difficult to recover all goods payments due to the poor business performance of the customer. |
| Institution 2 | 6,955,035.27 | 4,455,035.27 | 64.05% | It is difficult to recover |
| all goods payments due to the poor business performance of the customer. | ||||
| Institution 3 | 6,116,636.66 | 2,462,996.13 | 40.27% | It is difficult to recover all goods payments due to the poor business performance of the customer. |
| Total | 41,279,711.95 | 15,136,103.86 | -- | -- |
Bad debt reserve set aside individually: NoneBad debt reserve set aside in portfolios: 32,012,000.50
Unit: RMB
| Name | Balance at the end of the period | ||
| Book balance | Impairment provision | Ratio of provision | |
| Within the credit period | 975,238,842.10 | 19,504,776.82 | 2.00% |
| Credit period - 1 year | 202,205,978.40 | 10,110,298.92 | 5.00% |
| 1 to 2 years | 1,392,680.29 | 208,902.04 | 15.00% |
| 2 to 3 years | 1,807,523.87 | 542,257.16 | 30.00% |
| 3 to 5 years | 2,818,002.94 | 1,409,001.47 | 50.00% |
| Over 5 years | 236,764.09 | 236,764.09 | 100.00% |
| Total | 1,183,699,791.69 | 32,012,000.50 | -- |
Description of reason for the portfolio:
Accounts receivable with the same aging have similar credit risk characteristics.Provision of bad debt reserve by portfolio: NoneDescription of reason for the portfolio:
If the bad debt reserve of accounts receivable is set aside according to general model of expected credit loss, please refer to thedisclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 1,184,399,855.77 |
| 1 to 2 years | 1,392,680.29 |
| 2 to 3 years | 1,807,523.87 |
| Over 3 years | 37,379,443.71 |
| 3 to 4 years | 2,555,202.94 |
| 4 to 5 years | 28,470,840.02 |
| Over 5 years | 6,353,400.75 |
| Total | 1,224,979,503.64 |
(2) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable | 38,097,010.55 | 9,051,093.81 | 47,148,104.36 | |||
| Total | 38,097,010.55 | 9,051,093.81 | 47,148,104.36 | |||
Wherein, the amount of recovered or transferred back bad debt reserve in the reporting period is important: None
(3) Accounts receivable actually written off in the reporting period: None
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the period | Percentage in total balance of accounts receivable at the end of the period | Balance for bad debt reserve at the end of the period |
| 1st | 406,560,913.28 | 33.19% | 8,139,345.16 |
| 2nd | 122,362,632.61 | 9.99% | 4,359,565.43 |
| 3rd | 69,572,677.96 | 5.68% | 2,101,950.42 |
| 4th | 37,571,182.23 | 3.07% | 781,787.42 |
| 5th | 31,175,720.24 | 2.54% | 967,121.33 |
| Total | 667,243,126.32 | 54.47% |
(5) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of accountsreceivableThe Company has no amounts of assets and liabilities that are formed by the transfer and ongoing involvement ofaccounts receivable as at the end of the reporting period.
Other description: None
(6) Accounts receivable derecognized due to transfer of financial assets
The Company has no accounts receivable derecognized due to the transfer of financial assets as at the end of thereporting period.
6. Accounts receivable financing
Increase and decrease of accounts receivable financing and changes in fair value in the reporting period
□ Applicable √ Not applicable
If the provisions for asset impairment of accounts receivable financing are set aside according to general model of expected creditloss, please refer to the disclosure method of other receivables to disclose relevant information on provisions for asset impairment:
□ Applicable √ Not applicable
7. Prepayments
(1) Prepayments presentation by aging
Unit: RMB
| Aging | Balance at the end of the period | Balance at the beginning of the period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 36,685,769.73 | 100.00% | 26,819,108.57 | 100.00% |
| Total | 36,685,769.73 | -- | 26,819,108.57 | -- |
Explanation on the reason of untimely settlement of prepayments whose age exceeds one year with significant amount: None
(2) Top five payees in closing balance of prepayment
The Company’s total prepayment amount of the top five payees in closing balance of prepayment is RMB29,191,661.23, accountingfor 79.57% of closing balance of prepayment.Other description: None
8. Other receivables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Other receivables | 12,353,794.41 | 15,824,945.56 |
| Total | 12,353,794.41 | 15,824,945.56 |
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest: None
Other description: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Significant dividends receivable exceeding one year: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
Other description: None
(3) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature | Book balance at the end of the period | Book balance at the beginning of the period |
| Margins and deposits | 4,555,486.30 | 4,621,457.93 |
| Current accounts | 5,834,746.14 | 5,350,546.55 |
| Reserve | 2,167,837.76 | 1,704,120.13 |
| Others | 1,937,176.46 | 5,999,332.44 |
| Total | 14,495,246.66 | 17,675,457.05 |
2) Provision of bad debt reserve
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without | Expected credit losses in the whole duration (with |
| credit impairment) | credit impairment) | |||
| Balance as at January 1, 2021 | 1,850,511.49 | 1,850,511.49 | ||
| Balance as at January 1, 2021 in the reporting period | —— | —— | —— | —— |
| Provision in the reporting period | 309,391.71 | 309,391.71 | ||
| Write-off in the reporting period | 18,450.95 | 18,450.95 | ||
| Balance as at December 31, 2021 | 2,141,452.25 | 2,141,452.25 |
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 10,295,793.71 |
| 1 to 2 years | 735,665.88 |
| 2 to 3 years | 1,213,448.00 |
| Over 3 years | 2,250,339.07 |
| 3 to 4 years | 2,113,667.62 |
| 4 to 5 years | 82,454.05 |
| Over 5 years | 54,217.40 |
| Total | 14,495,246.66 |
3) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other receivables | 1,850,511.49 | 309,391.71 | 18,450.95 | 2,141,452.25 | ||
| Total | 1,850,511.49 | 309,391.71 | 18,450.95 | 2,141,452.25 | ||
Where the amount of recovered or reversed bad debt reserve in the reporting period is important: None
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
| Other receivables actually written off | 18,450.95 |
Description of write-offs of important other receivables: NoneDescription on the write-offs of other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of the amount | Balance at the end of the period | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt reserve at the end of the period |
| 1st | Others | 1,817,447.37 | Within 1 year | 12.54% | 90,872.37 |
| 2nd | Margins and deposits | 1,100,000.00 | 3-4 years | 7.59% | 550,000.00 |
| 3rd | Margins and deposits | 750,000.00 | Within 1 year, 2-3 years, 3-4 years | 5.17% | 320,000.00 |
| 4th | Margins and deposits | 600,000.00 | 2-3 years | 4.14% | 180,000.00 |
| 5th | Margins and deposits | 600,000.00 | Within 1 year, 1-2 years, 2- 3 years, 3-4 years | 4.14% | 171,750.00 |
| Total | -- | 4,867,447.37 | -- | 33.58% | 1,312,622.37 |
6) Receivables involving government grants
Unit: RMB
| Name of institution | Name of government grant project | Balance at the end of the period | Aging at the end of the period | Expected collection time, amount and basis |
None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of otherreceivables: None
9. Inventories
Whether the Company needs to comply with requirements for disclosure in the real estate industryNo
(1) Classification of inventories
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Provision for impairment of inventories or provision for contract performance cost | Book value | Book balance | Provision for impairment of inventories or provision for contract performance cost | Book value | |
| Raw materials | 886,711,194.32 | 5,050,118.51 | 881,661,075.81 | 1,148,312,808.05 | 133,039.11 | 1,148,179,768.94 |
| Work-in-process products | 50,455,115.89 | 188,464.55 | 50,266,651.34 | 40,777,441.76 | 306,847.08 | 40,470,594.68 |
| Commodity stocks | 458,467,589.59 | 4,792,993.52 | 453,674,596.07 | 410,313,722.29 | 2,738,280.52 | 407,575,441.77 |
| Packages | 43,288,272.57 | 465,044.89 | 42,823,227.68 | 32,644,525.84 | 145,489.07 | 32,499,036.77 |
| Low-value consumables | 24,525,776.59 | 820,943.23 | 23,704,833.36 | 13,889,922.62 | 529,767.94 | 13,360,154.68 |
| Materials for consigned processing | 15,501,132.69 | 15,501,132.69 | 19,189,498.48 | 19,189,498.48 | ||
| Total | 1,478,949,081.65 | 11,317,564.70 | 1,467,631,516.95 | 1,665,127,919.04 | 3,853,423.72 | 1,661,274,495.32 |
(2) Provision for impairment of inventories or provision for contract performance cost
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | ||
| Provision | Others | Reversal or written off | Others | |||
| Raw materials | 133,039.11 | 5,215,689.41 | 298,610.01 | 5,050,118.51 | ||
| Work-in-process products | 306,847.08 | 420,587.93 | 538,970.46 | 188,464.55 | ||
| Commodity stocks | 2,738,280.52 | 5,205,761.61 | 3,151,048.61 | 4,792,993.52 | ||
| Packages | 145,489.07 | 621,507.19 | 301,951.37 | 465,044.89 | ||
| Low-value consumables | 529,767.94 | 704,166.06 | 412,990.77 | 820,943.23 | ||
| Total | 3,853,423.72 | 12,167,712.20 | 4,703,571.22 | 11,317,564.70 | ||
(3) Explanation that balance of inventory at the end of the reporting period includes amount ofcapitalization of borrowing costs: None
(4) Explanation on amortized amount of contract performance cost in the reporting period: None
10. Contract assets: None
If the bad debt reserve of contrast assets is set aside according to general model of expected credit loss, please refer to the disclosuremethod of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
Provision for impairment of contract assets in the reporting periodOther description: None
11. Assets held for sale
Unit: RMB
| Item | Book balance at the end of the period | Impairment provision | Book value at the end of the period | Fair value | Estimated disposal fee | Estimated disposal time |
| Immovable assets of the old factory of Hubei C&S (including land use rights) | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | March 31, 2022 | ||
| Total | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | -- |
Other description:
In December 2019, in order to boost the investment and construction of Phase II of the high-end household paperproject in the industrial zone in the Economic Development Area of Xiaonan District, Xiaogan City, the Companysigned an agreement on the acquisition of the immovable assets in the old factory of Hubei C&S (including landuse rights) upon consultation with Xiaonan District People’s Government of Xiaogan City. The Company believedthat the immovable assets of the old factory of Hubei C&S (including land use rights) could be sold immediatelyin the current situation, according to similar transactions where such assets were sold. The Company signed abinding purchase agreement with Xiaogan Changxing Investment Co., Ltd. and Xiaonan District People’sGovernment of Xiaogan City regarding the transfer of such assets in December 2019. The Agreement containedimportant terms and conditions including the price and time of the transaction as well as penalty for breach ofcontract that was strict enough. Therefore, there is little possibility for the agreement to be significantly changedor canceled. The Company originally estimated that the ultimate transfer would be completed before December2020. However, under the impact of the COVID-19 pandemic in 2020, the government shifted its focus toanti-pandemic work with people’s interests above everything else. Especially, Xiaogan City of Hubei Provincewas one of the hardest-hit areas, so the government has put all efforts in the fight against the virus andpost-pandemic economic rejuvenation. As a result, it was unable to pay all asset transfer amount within the agreedperiod.In 2021, the Company actively communicated with Xiaogan Changxing Investment Co., Ltd. and Xiaonan District
People’s Government of Xiaogan City regarding asset delivery matters. However, the delivery was not completedat the end of 2021. The Company expects to finally complete the asset delivery in 2022.
12. Non-current assets due within one year: None
13. Other current assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Wealth management products | 10,000,000.00 | 50,000,000.00 |
| Input VAT to be deducted | 46,011,229.37 | 51,550,834.13 |
| Large-denomination Certificate of Deposit | 62,479,083.36 | |
| Prepaid corporate income tax | 5,040,567.23 | 33,735.17 |
| Total | 123,530,879.96 | 101,584,569.30 |
Other description: None
14. Investments in creditor’s rights: None
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Other description: None
15. Other investments in creditor’s rights
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Other description: None
16. Long-term receivables
(1) Long-term receivables
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
(2) Long-term receivables derecognized due to the transfer of financial assets: None
(3) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of long-termreceivables: None
17. Long-term equity investment: None
18. Investment in other equity instruments: None
19. Other non-current financial assets: None
20. Investment property
(1) Investment property measured at cost
√ Applicable □ Not applicable
Unit: RMB
| Item | Properties and buildings | Land use rights | Construction work in process | Total |
| I. Original Book Value | ||||
| 1. Balance at the beginning of the period | 31,072,632.92 | 21,661,131.29 | 52,733,764.21 | |
| 2. Increase in the current period | ||||
| (1) External purchase | ||||
| (2) Inventory\fixed assets\transfer from construction work in progress | ||||
| (3) Increase in business combination | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Balance at the | 31,072,632.92 | 21,661,131.29 | 52,733,764.21 |
| end of the period | ||||
| II. Accumulated Depreciation and Amortization | ||||
| 1. Balance at the beginning of the period | 12,995,477.31 | 5,162,920.96 | 18,158,398.27 | |
| 2. Increase in the current period | 1,099,028.28 | 337,855.92 | 1,436,884.20 | |
| (1) Provision or amortization | 1,099,028.28 | 337,855.92 | 1,436,884.20 | |
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Balance at the end of the period | 14,094,505.59 | 5,500,776.88 | 19,595,282.47 | |
| III. Impairment Provision | ||||
| 1. Balance at the beginning of the period | ||||
| 2. Increase in the current period | ||||
| (1) Provision | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Balance at the end of the period | ||||
| IV. Book Value | ||||
| 1. Book value at the end of the period | 16,978,127.33 | 16,160,354.41 | 33,138,481.74 |
| 2. Book value at the beginning of the period | 18,077,155.61 | 16,498,210.33 | 34,575,365.94 |
(2) Investment property measured at fair value
□ Applicable √ Not applicable
(3) Investment property that the certificate of title has not been issued
Other descriptionThe Company does not have investment property that the certificate of title has not been issued as at the end of thereporting period.
21. Fixed assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Fixed assets | 3,129,371,506.40 | 2,792,587,302.21 |
| Total | 3,129,371,506.40 | 2,792,587,302.21 |
(1) Information on fixed assets
Unit: RMB
| Item | Properties and buildings | Equipment | Office equipment | Motor vehicles | Production equipment | Total |
| I. Original Book Value | ||||||
| 1. Balance at the beginning of the period | 1,120,022,374.29 | 3,014,753,086.43 | 54,682,544.73 | 17,187,070.95 | 79,292,109.05 | 4,285,937,185.45 |
| 2. Increase in the current period | 221,540,475.10 | 462,760,491.66 | 6,801,127.34 | 5,512,453.21 | 16,296,410.71 | 712,910,958.02 |
| (1) Purchase | 357,457.51 | 5,660,378.30 | 5,512,453.21 | 5,963,410.63 | 17,493,699.65 | |
| (2) Inventory\fixed assets\transfer from construction work in progress | 221,540,475.10 | 462,403,034.15 | 1,140,749.04 | 10,333,000.08 | 695,417,258.37 | |
| (3) Increase in business combination |
| 3. Decrease in the current period | 222,162.15 | 31,607,659.05 | 385,452.39 | 707,005.81 | 1,141,249.87 | 34,063,529.27 |
| (1) Disposal or scrap | 222,162.15 | 31,607,659.05 | 385,452.39 | 707,005.81 | 1,141,249.87 | 34,063,529.27 |
| 4. Balance at the end of the period | 1,341,340,687.24 | 3,445,905,919.04 | 61,098,219.68 | 21,992,518.35 | 94,447,269.89 | 4,964,784,614.20 |
| II. Accumulated Depreciation | ||||||
| 1. Balance at the beginning of the period | 230,627,030.94 | 1,170,141,702.77 | 26,023,963.29 | 8,459,387.08 | 41,628,743.42 | 1,476,880,827.50 |
| 2. Increase in the current period | 47,902,864.38 | 273,681,898.27 | 8,599,848.62 | 1,785,655.14 | 12,062,059.01 | 344,032,325.42 |
| (1) Provision | 47,902,864.38 | 273,681,898.27 | 8,599,848.62 | 1,785,655.14 | 12,062,059.01 | 344,032,325.42 |
| 3. Decrease in the current period | 63,072.68 | 14,150,091.09 | 345,766.68 | 145,574.55 | 874,526.63 | 15,579,031.63 |
| (1) Disposal or scrap | 63,072.68 | 14,150,091.09 | 345,766.68 | 145,574.55 | 874,526.63 | 15,579,031.63 |
| 4. Balance at the end of the period | 278,466,822.64 | 1,429,673,509.95 | 34,278,045.23 | 10,099,467.67 | 52,816,275.80 | 1,805,334,121.29 |
| III. Impairment Provision | ||||||
| 1. Balance at the beginning of the period | 16,415,970.27 | 1,219.51 | 51,865.96 | 16,469,055.74 | ||
| 2. Increase in the current period | 271,024.32 | 18,934,167.77 | 58,221.32 | 69,358.14 | 19,332,771.55 | |
| (1) Provision | 271,024.32 | 18,934,167.77 | 58,221.32 | 69,358.14 | 19,332,771.55 | |
| 3. Decrease in the current period | 5,669,755.31 | 1,219.51 | 51,865.96 | 5,722,840.78 | ||
| (1) Disposal | 5,669,755.31 | 1,219.51 | 51,865.96 | 5,722,840.78 |
| or scrap | ||||||
| 4. Balance at the end of the period | 271,024.32 | 29,680,382.73 | 58,221.32 | 69,358.14 | 30,078,986.51 | |
| IV. Book Value | ||||||
| 1. Book value at the end of the period | 1,062,602,840.28 | 1,986,552,026.36 | 26,761,953.13 | 11,893,050.68 | 41,561,635.95 | 3,129,371,506.40 |
| 2. Book value at the beginning of the period | 889,395,343.35 | 1,828,195,413.39 | 28,657,361.93 | 8,727,683.87 | 37,611,499.67 | 2,792,587,302.21 |
(2) Information on temporarily idle fixed assets
Unit: RMB
| Item | Original book value | Accumulated depreciation | Impairment provision | Book value | Remarks |
| Equipment | 65,694,545.99 | 33,818,928.73 | 29,951,407.05 | 1,924,210.21 | |
| Office equipment | 418,027.75 | 358,726.43 | 58,221.32 | 1,080.00 | |
| Production equipment | 147,951.48 | 68,293.34 | 69,358.14 | 10,300.00 | |
| Total | 66,260,525.22 | 34,245,948.50 | 30,078,986.51 | 1,935,590.21 |
(3) Fixed assets leased through operating lease: None
(4) Fixed assets that the certificate of title has not been issued
Unit: RMB
| Item | Book value | Reasons for the certificate of title having not been issued |
| Workshops, warehouses, and dormitories of Hubei C&S | 157,047,508.26 | Processing |
| Plants and warehouses of Tangshan Branch | 45,719,124.58 | Processing |
| Workshops of Zhejiang C&S | 3,618,339.02 | Processing |
| Total | 206,384,971.86 |
Other description: None
(5) Disposal of fixed assets: None
22. Construction work in process
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Construction work in process | 134,875,696.94 | 275,904,617.95 |
| Total | 134,875,696.94 | 275,904,617.95 |
(1) Construction work in progress
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Construction work of C&S Paper | 10,160,431.64 | 10,160,431.64 | ||||
| Construction work of Jiangmen C&S | 3,894,339.75 | 3,894,339.75 | 1,028,646.43 | 1,028,646.43 | ||
| Construction work of Zhejiang C&S | 1,136,260.16 | 1,136,260.16 | 249,608.17 | 249,608.17 | ||
| Construction work of Sichuan C&S | 4,628,355.84 | 4,628,355.84 | 5,760,144.05 | 5,760,144.05 | ||
| Construction work of Tangshan Branch | 104,140,687.38 | 104,140,687.38 | ||||
| Construction work of Hubei C&S | 4,347,806.26 | 4,347,806.26 | 244,523,934.15 | 244,523,934.15 | ||
| Construction work of Yunfu C&S | 6,037,233.84 | 6,037,233.84 | 24,342,285.15 | 24,342,285.15 | ||
| Construction work of Jiangsu C&S | 530,582.07 | 530,582.07 | ||||
| Total | 134,875,696.94 | 134,875,696.94 | 275,904,617.95 | 275,904,617.95 | ||
(2) Changes of significant construction work in progress in the current period
Unit: RMB
| Project | Budget number | Balance at the beginning of the period | Increase in the current period | Amount of fixed assets transferred in the current period | Decrease in the current period | Balance at the end of the period | Proportion of the cumulative construction input in budget | Construction progress | Accumulative amount of interest capitalization | Including: Amount of interest capitalization in the period | Interest capitalization rate in the current period | Source of fund |
| Construction work of C&S Paper | 15,715,000.00 | 10,160,431.64 | 10,160,431.64 | 64.65% | 64.65% | Others | ||||||
| Construction work of Jiangmen C&S | 34,436,514.00 | 1,028,646.43 | 32,901,603.40 | 30,035,910.08 | 3,894,339.75 | 98.53% | 98.53% | Others | ||||
| Construction work of Zhejiang C&S | 12,621,362.34 | 249,608.17 | 12,224,040.35 | 11,337,388.36 | 1,136,260.16 | 98.83% | 98.83% | Others | ||||
| Construction work of Sichuan C&S | 20,392,201.82 | 5,760,144.05 | 14,030,371.51 | 15,162,159.72 | 4,628,355.84 | 97.05% | 97.05% | Others | ||||
| Construction work of Tangshan Branch | 314,192,854.86 | 110,280,631.73 | 6,139,944.35 | 104,140,687.38 | 54.11% | 54.11% | Others | |||||
| Construction work of Hubei C&S | 683,700,000.00 | 244,523,934.15 | 348,998,663.44 | 589,174,791.33 | 4,347,806.26 | 95.96% | 95.96% | Others |
| Construction work of Yunfu C&S | 58,280,000.00 | 24,342,285.15 | 25,262,013.22 | 43,567,064.53 | 6,037,233.84 | 85.60% | 85.60% | Others | ||||
| Construction work of Jiangsu C&S | 695,600,000.00 | 530,582.07 | 530,582.07 | 0.08% | 0.08% | Others | ||||||
| Total | 1,834,937,933.02 | 275,904,617.95 | 554,388,337.36 | 695,417,258.37 | 134,875,696.94 | -- | -- | -- |
(3) Construction-in-progress provision set aside in the current period
Other description
There was no situation where the recoverable amount of the construction work in progress is lower than the bookvalue which required provisions in the Company in the reporting period.
(4) Construction materials: None
23. Productive biological assets
(1) Productive biological assets measured at cost
□ Applicable √ Not applicable
(2) Productive biological assets measured at fair value
□ Applicable √ Not applicable
24. Oil & gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
Unit: RMB
| Item | Properties and buildings | Total |
| I. Original Book Value | ||
| 1. Balance at the beginning of the period | 12,852,715.53 | 12,852,715.53 |
| 2. Increase in the current period | 10,276,053.63 | 10,276,053.63 |
| 3. Decrease in the current period | ||
| 4. Balance at the end of the period | 23,128,769.16 | 23,128,769.16 |
| II. Accumulated Depreciation | ||
| 1. Balance at the beginning of the period | ||
| 2. Increase in the current period | 8,828,248.39 | 8,828,248.39 |
| (1) Provision | 8,828,248.39 | 8,828,248.39 |
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| 4. Balance at the end of the period | 8,828,248.39 | 8,828,248.39 |
| III. Impairment Provision | ||
| 1. Balance at the beginning of the period | ||
| 2. Increase in the current period | ||
| (1) Provision | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| 4. Balance at the end of the period | ||
| IV. Book Value | ||
| 1. Book value at the end of the period | 14,300,520.77 | 14,300,520.77 |
| 2. Book value at the beginning of the period | 12,852,715.53 | 12,852,715.53 |
Other description: None
26. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Land use right | Patent right | Non-patented technology | Application software | Trademark right | Total |
| I. Original Book |
| Value | ||||||
| 1. Balance at the beginning of the period | 189,064,322.15 | 1,342,721.84 | 18,819,434.67 | 168,370.83 | 209,394,849.49 | |
| 2. Increase in the current period | 390,566.04 | 5,654,345.39 | 6,044,911.43 | |||
| (1) Purchase | 390,566.04 | 5,654,345.39 | 6,044,911.43 | |||
| (2) Internal R&D | ||||||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Balance at the end of the period | 189,064,322.15 | 1,733,287.88 | 24,473,780.06 | 168,370.83 | 215,439,760.92 | |
| II. Accumulated Amortization | ||||||
| 1. Balance at the beginning of the period | 29,450,960.14 | 885,237.05 | 9,534,509.23 | 168,370.83 | 40,039,077.25 | |
| 2. Increase in the current period | 3,797,303.52 | 115,751.12 | 3,033,700.92 | 6,946,755.56 | ||
| (1) Provision | 3,797,303.52 | 115,751.12 | 3,033,700.92 | 6,946,755.56 | ||
| 3. Decrease in the current period | ||||||
| (1) |
| Disposal | ||||||
| 4. Balance at the end of the period | 33,248,263.66 | 1,000,988.17 | 12,568,210.15 | 168,370.83 | 46,985,832.81 | |
| III. Impairment Provision | ||||||
| 1. Balance at the beginning of the period | ||||||
| 2. Increase in the current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Balance at the end of the period | ||||||
| IV. Book Value | ||||||
| 1. Book value at the end of the period | 155,816,058.49 | 732,299.71 | 11,905,569.91 | 168,453,928.11 | ||
| 2. Book value at the beginning of the period | 159,613,362.01 | 457,484.79 | 9,284,925.44 | 169,355,772.24 |
The intangible assets generated other than internal R&D of the Company at the end of the period occupy 0.00% of the balance ofintangible assets.
(2) Information on the land use rights that the certificate of title has not been issued: None
27. Development expenses: None
28. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of investee or the matters forming goodwill | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | ||
| Formed by business combination | Disposal | |||||
| Merger of Zhongshan Paper involving enterprises not under common control | 64,654.15 | 64,654.15 | ||||
| Total | 64,654.15 | 64,654.15 | ||||
(2) Provision for impairment of goodwill
Unit: RMB
| Name of investee or the matters forming goodwill | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | ||
| Provision | Disposal | |||||
| Total | ||||||
Relevant information on the asset group or asset group portfolio in which the goodwill is locatedExplain the method to confirm the process of goodwill impairment test, key parameters (e.g. the growth rate in the predictive periodwhen predicting the present value of future cash flow, the growth rate in the stable period, profit rate, discount rate, and predictiveperiod), and the goodwill impairment loss:
Note: After conducting the asset impairment test by combining the goodwill with corresponding asset groups,there was no impairment as at December 31, 2021, and provisions at the end of the reporting period were not setaside.Influence of the goodwill impairment testOther description: None
29. Long-term unamortized expenses
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Amortized amount of the current period | Other decreases | Balance at the end of the period |
| Use rights of sewage discharge | 2,308,598.93 | 1,385,159.40 | 923,439.53 | ||
| Decoration fees of office buildings | 22,365,634.21 | 996,330.31 | 9,777,549.96 | 13,584,414.56 | |
| Electricity use rights | 1,961,750.00 | 855,750.00 | 562,450.00 | 2,255,050.00 | |
| Total | 26,635,983.14 | 1,852,080.31 | 11,725,159.36 | 16,762,904.09 |
Other description: None
30. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that were not offset
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for asset impairment | 48,619,359.11 | 10,491,437.82 | 37,236,661.77 | 8,048,641.53 |
| Unrealized profit in internal transaction | 48,456,053.79 | 10,181,650.08 | 59,038,241.84 | 11,427,908.55 |
| Deductible loss | 396,983,644.42 | 99,145,338.70 | 157,221,067.56 | 39,305,266.89 |
| Provision for impairment of inventories | 11,317,564.70 | 1,862,027.54 | 3,853,423.72 | 702,165.91 |
| Provision for impairment of fixed assets | 30,078,986.51 | 5,111,314.51 | 16,469,055.74 | 2,795,038.08 |
| Equity incentive cost | 57,965,133.83 | 14,145,915.91 | 136,647,479.87 | 33,312,991.30 |
| Accrued expenses | 96,707,743.24 | 24,176,935.81 | 60,267,582.48 | 15,066,895.62 |
| Deferred income | 90,270,562.19 | 17,071,324.48 | 2,833,819.12 | 708,454.78 |
| Total | 780,399,047.79 | 182,185,944.85 | 473,567,332.10 | 111,367,362.66 |
(2) Deferred income tax liabilities that were not offset
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Pre-tax deduction of fixed assets at one time as stipulated in the tax law | 240,560,367.15 | 46,514,550.50 | 190,069,258.27 | 35,903,653.30 |
| Total | 240,560,367.15 | 46,514,550.50 | 190,069,258.27 | 35,903,653.30 |
(3) Presentation of deferred income tax assets or liabilities by the net amount after offset
Unit: RMB
| Item | Offset amount of the deferred income tax assets and liabilities at the end of the reporting period | Balance of the deferred income tax assets or liabilities after offset at the end of the reporting period | Offset amount of the deferred income tax assets and liabilities at the beginning of the reporting period | Balance of the deferred income tax assets or liabilities after offset at the beginning of the reporting period |
| Deferred income tax assets | 182,185,944.85 | 111,367,362.66 | ||
| Deferred income tax liabilities | 46,514,550.50 | 35,903,653.30 |
(4) Breakdown of unconfirmed deferred income tax assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Deductible temporary differences | 2,710,860.27 | |
| Total | 2,710,860.27 |
(5) Deductible losses of the unconfirmed deferred income tax assets due in the next year: None
Other description: None
31. Other non-current assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Prepayment for property purchase | 56,147,845.00 | 56,147,845.00 | ||||
| Prepayment for engineering equipment | 34,786,139.79 | 34,786,139.79 | 26,000,909.91 | 26,000,909.91 | ||
| Prepayment for software | 708,378.66 | 708,378.66 | 2,027,042.24 | 2,027,042.24 | ||
| Total | 91,642,363.45 | 91,642,363.45 | 28,027,952.15 | 28,027,952.15 |
Other description: None
32. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Guaranteed borrowings | 0.00 | 142,942,941.34 |
| Total | 142,942,941.34 |
Description of classification of short-term borrowings: None
(2) Short-term borrowings overdue but unpaid: None
Other description:
There were no short-term borrowings overdue but unpaid in the Company at the end of the reporting period.
33. Tradable financial liabilities: None
34. Derivative financial liabilities: None
35. Notes payable
Unit: RMB
| Category | Balance at the end of the period | Balance at the beginning of the period |
| Banker’s acceptance | 334,969,632.58 | 234,887,563.22 |
| Total | 334,969,632.58 | 234,887,563.22 |
The total amount of the notes payable due but unpaid at the end of the reporting period is RMB0.00.
36. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Accounts payable | 829,113,780.31 | 761,519,389.26 |
| Total | 829,113,780.31 | 761,519,389.26 |
(2) Significant accounts payable with aging over one year
The Company has no significant accounts payable with aging over one year at the end of the reporting period.
37. Payments received in advance
(1) List of payments received in advance: None
(2) Significant payments received in advance with aging over one year: None
38. Contract liabilities
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Advances on sales | 164,360,443.34 | 137,333,617.40 |
| Total | 164,360,443.34 | 137,333,617.40 |
39. Employee remuneration payable
(1) List of employee remuneration payable
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| I. Short-term Compensation | 123,506,119.43 | 803,282,369.61 | 787,575,751.49 | 139,212,737.55 |
| II. Post-employment Benefits - Defined Contribution Plan | 18,507.68 | 55,186,747.36 | 54,866,586.13 | 338,668.91 |
| III. Dismissal Benefits | 419,395.38 | 419,395.38 | ||
| Total | 123,524,627.11 | 858,888,512.35 | 842,861,733.00 | 139,551,406.46 |
(2) List of short-term remuneration
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| 1. Salary, bonus and subsidy | 122,595,782.24 | 725,396,870.89 | 709,736,379.31 | 138,256,273.82 |
| 2. Employee welfare | 27,611,513.61 | 27,611,513.61 | ||
| 3. Social insurance | 252,766.51 | 27,731,765.83 | 27,728,427.43 | 256,104.91 |
| premiums | ||||
| Including: Medical insurance | 250,105.53 | 23,770,884.37 | 23,786,710.42 | 234,279.48 |
| Employment injury insurance | 167.06 | 2,401,347.23 | 2,381,298.38 | 20,215.91 |
| Maternity insurance | 2,493.92 | 1,559,534.23 | 1,560,418.63 | 1,609.52 |
| 4. Housing provident fund | 374,311.00 | 19,114,920.87 | 19,059,822.14 | 429,409.73 |
| 5. Labor union fee and staff education fee | 283,259.68 | 3,427,298.41 | 3,439,609.00 | 270,949.09 |
| Total | 123,506,119.43 | 803,282,369.61 | 787,575,751.49 | 139,212,737.55 |
(3) List of defined contribution plans
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| 1. Basic endowment insurance | 17,927.54 | 53,333,775.03 | 53,024,526.19 | 327,176.38 |
| 2. Unemployment insurance | 580.14 | 1,852,972.33 | 1,842,059.94 | 11,492.53 |
| Total | 18,507.68 | 55,186,747.36 | 54,866,586.13 | 338,668.91 |
Other description:
There was no delinquency of employee remuneration payable by the Company at the end of the reporting period.
40. Tax and fees payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Value-added tax | 47,434,141.38 | 25,574,167.63 |
| Corporate income tax | 47,999,180.89 | 79,266,423.94 |
| Individual income tax | 2,282,034.20 | 1,840,329.83 |
| City construction and maintenance tax | 3,157,814.56 | 1,593,768.94 |
| Property tax | 1,479,897.22 | 1,087,129.90 |
| Education surcharges | 1,525,822.40 | 829,794.94 |
| Local education surcharges | 1,017,214.96 | 524,068.91 |
| Land use tax | 845,611.47 | 796,430.89 |
| Stamp tax | 794,985.81 | 596,629.80 |
| Security fund for the disabled | 380,114.13 | 334,989.76 |
| Environmental protection tax | 183,923.63 | 97,465.13 |
| Resource tax | 84,070.32 | 66,855.20 |
| Total | 107,184,810.97 | 112,608,054.87 |
Other description: None
41. Other payables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Dividend payable | 1,352,746.20 | 1,437,466.77 |
| Other payables | 853,519,432.58 | 753,407,113.32 |
| Total | 854,872,178.78 | 754,844,580.09 |
(1) Interest payable: None
(2) Dividends payable: None
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Dividends for restricted shares | 1,352,746.20 | 1,437,466.77 |
| Total | 1,352,746.20 | 1,437,466.77 |
Other descriptions, including important dividends payable exceeding one year, and the reasons for non-payment that should bedisclosed: None
(3) Other payables
1) Other payables based on amount nature
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Unpaid fees | 791,690,297.01 | 658,391,225.24 |
| Repurchase obligation of restricted shares | 33,312,589.40 | 68,800,189.53 |
| Margins and deposits | 17,980,073.86 | 20,964,424.40 |
| Authorized collection and payment of individual income tax under the equity incentive | 8,360,156.40 | 2,877,482.40 |
| Others | 2,176,315.91 | 2,373,791.75 |
| Total | 853,519,432.58 | 753,407,113.32 |
2) Other important payables with aging exceeding one year
Unit: RMB
| Item | Balance at the end of the period | Reason for unsettlement or not carry-over |
| 1st | 6,323,465.21 | Not yet settled |
| Total | 6,323,465.21 | -- |
Other description: None
42. Liabilities held for sale: None
43. Non-current liabilities due within one year
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Lease liabilities due within one year | 8,616,487.38 | 4,762,895.86 |
| Total | 8,616,487.38 | 4,762,895.86 |
Other description: None
44. Other current liabilities
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Tax pending changeover | 21,250,613.29 | 17,628,086.63 |
| Total | 21,250,613.29 | 17,628,086.63 |
45. Long-term borrowings: None
(1) List of long-term borrowings: None
46. Bonds payable
(1) Bonds payable: None
(2) Changes in the increase and decrease of the bonds payable (excluding other financial instruments suchas preference shares and perpetual bonds that are divided into financial liabilities): None
(3) Descriptions of the conditions for converting conditions and time of converting bonds: None
(4) Descriptions of other financial instruments that are divided into financial liabilities: None
47. Lease liabilities
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Properties and buildings | 14,182,415.52 | 12,852,715.53 |
| Lease liabilities due within one year | -8,616,487.38 | -4,762,895.86 |
| Total | 5,565,928.14 | 8,089,819.67 |
Other description: None
48. Long-term payables: None
(1) Long-term payables listed based on amount nature: None
(2) Special payables: None
49. Long-term employee remuneration payable
(1) Table of long-term employee remuneration payable: None
(2) Changes of the defined benefit plan: None
50. Projected liabilities: None
51. Deferred income
Unit: RMB
| Item | Balance at the beginning of the | Increase in the current period | Decrease in the current period | Balance at the end of the period | Reason |
| period | |||||
| Government grants | 115,101,158.13 | 4,000,000.00 | 14,617,728.59 | 104,483,429.54 | Related to asset Government grants |
| Total | 115,101,158.13 | 4,000,000.00 | 14,617,728.59 | 104,483,429.54 | -- |
Projects involving government grants:
Unit: RMB
| Liability item | Balance at the beginning of the period | Increased amount of grants in the current period | Amount included in non-operating income in the current period | Amount included in other income in the current period | Amount of offset costs in the current period | Other changes | Balance at the end of the period | Related to asset/income |
| Subsidies for the infrastructure construction of new factory in Hubei | 30,535,934.00 | 1,071,436.32 | 29,464,497.68 | Related to asset | ||||
| Support funds for the construction of Automated Storage & Retrieval System | 21,188,970.58 | 1,561,764.72 | 19,627,205.86 | Related to asset | ||||
| Support funds for the transformation of Phase I project | 16,172,657.65 | 2,251,422.48 | 13,921,235.17 | Related to asset | ||||
| Support funds for equipment of Phase II project | 9,467,571.00 | 1,955,301.73 | 7,512,269.27 | Related to asset | ||||
| Financial support funds for | 7,453,253.75 | 625,447.80 | 6,827,805.95 | Related to asset |
| construction expansion of 25,000-ton high-grade household paper project | ||||||||
| Subsidy funds for the smart factory project | 2,833,819.12 | 4,000,000.00 | 1,794,486.82 | 5,039,332.30 | Related to asset | |||
| Ex-post funds awarded to the first batch of the union enterprises for technical transformation in 2017 | 4,081,579.34 | 634,586.64 | 3,446,992.70 | Related to asset | ||||
| Support funds for the technical transformation of equipment production line | 3,640,736.00 | 800,790.96 | 2,839,945.04 | Related to asset | ||||
| Support funds for the construction of environmental protection facilities | 3,032,539.79 | 319,047.60 | 2,713,492.19 | Related to asset | ||||
| Support funds for enterprise technical upgrading | 3,219,688.10 | 792,374.28 | 2,427,313.82 | Related to asset | ||||
| Discount interest | 2,439,593.75 | 193,875.00 | 2,245,718.75 | Related to asset |
| funds for imported equipment | ||||||||
| Subsidies for sewage treatment station | 2,664,772.67 | 477,272.76 | 2,187,499.91 | Related to asset | ||||
| Subsidies for the expansion of the high-grade household paper project with an annual output of 25,000 tons | 1,906,666.83 | 159,999.96 | 1,746,666.87 | Related to asset | ||||
| Special funds for capacity expansion of 25,000-ton high-grade household paper project | 1,820,833.22 | 575,000.04 | 1,245,833.18 | Related to asset | ||||
| Subsidies for construction of the water treatment project | 1,369,861.36 | 155,078.64 | 1,214,782.72 | Related to asset | ||||
| Support funds for sewage centralized water treatment project | 972,000.00 | 121,500.00 | 850,500.00 | Related to asset | ||||
| Provincial funds for traditional industry | 910,714.30 | 107,142.84 | 803,571.46 | Related to asset |
| transformation projects | ||||||||
| Funds for reconstruction project of automatic production lines | 1,389,966.67 | 1,021,200.00 | 368,766.67 | Related to asset | ||||
| Total | 115,101,158.13 | 4,000,000.00 | 14,617,728.59 | 104,483,429.54 |
Other description: None
52. Other non-current liabilities: None
53. Share capital
Unit: RMB
| Balance at the beginning of the period | Increase and decrease of this change (+ and -) | Balance at the end of the period | |||||
| Issuance of new shares | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | |||
| Total number of shares | 1,311,487,077.00 | 3,131,211.00 | -2,160,733.00 | 970,478.00 | 1,312,457,555.00 | ||
Other description:
Changes in the Company’s share capital during the year:
According to the Proposal on Achieving the Exercise Conditions of the First Exercise Period for Stock OptionsAwarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan approvedat the 23rd meeting of the fourth session of the Board of Directors, the number of stock options that had metexercise conditions was 3,431,505 and the number of incentive recipients in conformity with the exerciseconditions reached 2,522. The exercise period was from June 10, 2020 to February 26, 2021. According to theProposal on Achieving the Exercise Conditions of the First Exercise Period for Reserved Stock Options under theCompany’s 2018 Stock Option and Restricted Stock Incentive Plan approved at the 28th meeting of the fourthsession of the Board of Directors, the number of stock options that have met exercise conditions was 640,389 andthe number of incentive recipients in conformity with the exercise conditions reached 88. The exercise period wasfrom November 17, 2020 to September 10, 2021. As of February 26, 2021, all the incentive recipients who hadmet the above exercise conditions have exercise their rights, and a total of 4,071,894 shares have been subscribed,of which 461,478 shares were subscribed in 2021.The 5th meeting of the fifth session of the Board of Directors and the fourth extraordinary general meeting of2021 reviewed and approved the Proposal on the Repurchase and Deregistration of Partial Restricted StocksAwarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan. Pursuantto the proposal, as some incentive recipients were disqualified to hold incentive stocks after leaving the Company
or failing the appraisal or some recipients passed the appraisal but did not attain a full score and hence could notunlock all the stocks, the Company decided to repurchase and deregister total 2,021,305 restricted shares of 96incentive recipients.The 12th meeting of the fifth session of the Board of Directors and the sixth extraordinary general meeting of2021 reviewed and approved the Proposal on the Repurchase and Deregistration of Partial Reserved RestrictedStocks under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan. Pursuant to the proposal, assome incentive recipients were disqualified to hold incentive stocks after leaving the Company or failing theappraisal or some recipients passed the appraisal but did not attain a full score and hence could not unlock all thestocks, the Company decided to repurchase and deregister total 139,428 restricted shares of 17 incentiverecipients.According to the Proposal on Achieving the Exercise Conditions of the Second Exercise Period for Stock OptionsAwarded in the First Grant under the Company’s 2018 Stock Option and Restricted Stock Incentive Plan approvedat the 6th meeting of the fifth session of the Board of Directors, the number of stock options that had met exerciseconditions was 2,948,559 and the number of incentive recipients in conformity with the exercise conditionsreached 2,274. The exercise period was from June 30, 2021 to February 28, 2022. According to the Proposal onAchieving the Exercise Conditions of the Second Exercise Period for Reserved Stock Options under the Company’s2018 Stock Option and Restricted Stock Incentive Plan approved at the 12th meeting of the fifth session of theBoard of Directors, the number of stock options that have met exercise conditions was 609,375 and the number ofincentive recipients in conformity with the exercise conditions reached 70. The exercise period is from December14, 2021 to September 9, 2022. As of December 31, 2021, the incentive recipients who had met the above exerciseconditions have successively begun to exercise their rights, and a total of 2,669,733 shares have been subscribed.
54. Other equity instruments
(1) Basic information on other financial instruments in issue at the end of the reporting period, such as thepreference shares and perpetual bonds: None
(2) Table of changes in other financial instruments in issue at the end of the reporting period, such as thepreference shares and perpetual bonds: None
55. Capital reserve
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Capital premium (share premium) | 626,797,181.97 | 31,164,564.50 | 7,570,302.21 | 650,391,444.26 |
| Other capital reserve | 280,209,323.08 | 16,491,219.65 | 6,349,300.80 | 290,351,241.93 |
| Total | 907,006,505.05 | 47,655,784.15 | 13,919,603.01 | 940,742,686.19 |
Other descriptions, including increase/decrease in the reporting period and reasons of change:
(1) The exercise of stock options awarded in the first grant and the exercise of reserved stock options as per the2018 Stock Option and Restricted Stock Incentive Plan increased “capital reserve-share premium” byRMB15,730,354.61 and decreased “capital reserve-other capital reserve” by RMB3,024,288.84. The repurchase
and deregistration of incentive stocks decreased “capital reserve-other capital reserve” by RMB6,730,945.65.
(2) The Company set aside provision for equity incentive costs and fees in the reporting period andRMB12,167,835.66 was included in "capital reserve - other capital reserve". Difference between the deductibleamount before tax under the 2018 Stock Option and Restricted Stock Incentive Plan and recognized book expensewas confirmed as deferred income tax asset and RMB16,476,100.25 was included in "capital reserve - othercapital reserve".
56. Treasury shares
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Restricted shares | 68,800,189.53 | 84,720.57 | 35,572,320.70 | 33,312,589.40 |
| Ordinary shares | 27,680,721.76 | 661,249,972.23 | 688,930,693.99 | |
| Total | 96,480,911.29 | 661,334,692.80 | 35,572,320.70 | 722,243,283.39 |
Other descriptions, including increase/decrease in the reporting period and reasons of change:
Notes: (1) The second unlock period unlocked 4,809,045 shares of first-grant stock options at RMB4.33/share and714,832 shares of reserved stock options at RMB7.02/share granted under the 2018 Stock Option and RestrictedStock Incentive Plan. Totally RMB25,841,285.49 was included in the decrease of the current period; thewithdrawable cash dividend of RMB84,720.57 was included in the increase of the current period.
(2) As some incentive recipients for stocks awarded in the first grant left the Company or failed to pass theappraisal, the Company repurchased and deregistered 2,021,305 shares with RMB4.33 per share. As someincentive recipients for reserved stocks left the Company or failed to pass the appraisal, the Company repurchasedand deregistered 139,428 shares with RMB7.02 per share. Totally 2,160,733 shares were repurchased with anamount of RMB9,731,035.21, which was included in the decrease of the current period.
(3) The repurchased shares with a total value of RMB661,249,972.23 was included in the increase of the currentperiod.
57. Other comprehensive income: None
58. Special reserves: None
59. Surplus reserve
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Statutory surplus reserve | 61,469,258.27 | 45,515,017.15 | 106,984,275.42 | |
| Total | 61,469,258.27 | 45,515,017.15 | 106,984,275.42 |
Explanation of surplus reserves, including increase/decrease in the reporting period and reasons of change:
In accordance with provisions of the Company Law and the Articles of Association, the Company appropriates10% of the net profit as statutory surplus reserve. The appropriation will stop if the accumulated amount of
statutory surplus reserve reaches more than 50% of the Company’s registered capital.After the appropriation of the statutory surplus reserve, discretionary surplus reserve may be withdrawn. Uponapproval, the discretionary surplus reserve may be used to make up for losses in previous years or to increase theshare capital.
60. Retained earnings
Unit: RMB
| Item | Current period | Last period |
| Retained earnings before adjustment at the end of the last period | 2,858,664,147.39 | 2,058,968,835.80 |
| Retained earnings at the beginning of the period after adjustment | 2,858,664,147.39 | 2,058,968,835.80 |
| Plus: Net profit attributable to owners of the parent company of the current period | 581,097,222.93 | 905,889,081.41 |
| Less: Appropriated statutory surplus reserve | 45,515,017.15 | 8,263,675.41 |
| Dividends on ordinary shares payable | 128,634,924.81 | 97,930,094.41 |
| Retained earnings at the end of the period | 3,265,611,428.36 | 2,858,664,147.39 |
Details on adjusting retained earnings at the beginning of the period:
(1) As a result of retrospective adjustments according to the Accounting Standards for Business Enterprises and itsrelated new provisions, the impact on retained earnings at the beginning of the period was RMB0.00.
(2) Due to the changes in accounting policies, the impact on retained earnings at the beginning of the period wasRMB0.00.
(3) Due to the correction of material accounting errors, the impact on retained earnings at the beginning of theperiod was RMB0.00.
(4) Due to the changes in the scope of combination caused by the same control, the impact on retained earnings atthe beginning of the period was RMB0.00.
(5) Other adjustments affected retained earnings at the beginning of the period by a total of RMB0.00.
61. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | ||
| Income | Cost | Income | Cost | |
| Principal business | 8,735,274,140.52 | 5,501,122,254.42 | 7,599,908,947.02 | 4,379,376,627.64 |
| Other businesses | 414,596,324.28 | 361,926,849.96 | 223,619,469.30 | 211,527,412.71 |
| Total | 9,149,870,464.80 | 5,863,049,104.38 | 7,823,528,416.32 | 4,590,904,040.35 |
Whether lower of the audited net profits before and after deducting the non-recurring profit and loss is negative
□ Yes √ No
Information related to income:
Unit: RMB
| Contract classification | Branch 1 | Branch 2 | Total | |
| By product type | 9,149,870,464.80 | 9,149,870,464.80 | ||
| Including: | ||||
| Household paper | 8,658,308,172.33 | 8,658,308,172.33 | ||
| Personal care | 76,965,968.19 | 76,965,968.19 | ||
| Others | 414,596,324.28 | 414,596,324.28 | ||
| By operating region | 9,149,870,464.80 | 9,149,870,464.80 | ||
| Including: | ||||
| Domestic | 8,950,419,612.11 | 8,950,419,612.11 | ||
| Abroad | 199,450,852.69 | 199,450,852.69 | ||
| By market or customer type | ||||
| Including: | ||||
| Contract type | ||||
| Including: | ||||
| By the time of goods transfer | ||||
| Including: | ||||
| By contract term | ||||
| Including: | ||||
| By sales channel | 9,149,870,464.80 | 9,149,870,464.80 | ||
| Including: | ||||
| Traditional | 4,391,370,600.48 | 4,391,370,600.48 | ||
| Non-traditional | 4,343,903,540.04 | 4,343,903,540.04 | ||
| Others | 414,596,324.28 | 414,596,324.28 | ||
| Total | 9,149,870,464.80 | 9,149,870,464.80 |
Information related to performance obligation: NoneInformation related to the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed contract that is not performed orfully performed at the end of the reporting period is RMB54,001,894.59, of which the income of RMB54,001,894.59 is expected tobe confirmed as income in the year of 2022.
Other description: None
62. Tax and surcharges
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| City construction and maintenance tax | 23,259,197.19 | 20,149,751.80 |
| Education surcharges | 11,299,182.73 | 9,597,106.24 |
| Resource tax | 108,953.60 | 107,367.57 |
| Property tax | 11,076,937.04 | 9,604,943.14 |
| Land use tax | 3,209,808.34 | 3,492,720.58 |
| Vehicle and vessel tax | 11,340.00 | 18,240.00 |
| Stamp tax | 8,115,643.88 | 6,425,868.35 |
| Local education surcharges | 7,766,237.20 | 6,368,693.14 |
| Environmental protection tax | 698,352.43 | 348,227.27 |
| Total | 65,545,652.41 | 56,112,918.09 |
Other description: None
63. Selling expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 392,220,286.40 | 289,793,524.85 |
| Product promotion fees | 1,178,898,284.39 | 891,673,851.97 |
| Transportation expenses | 101,585,932.85 | 90,696,221.79 |
| Advertising expenses | 164,748,600.16 | 117,926,339.81 |
| Shopping mall management fees | 91,587,702.20 | 101,261,590.30 |
| Traveling expenses | 28,835,492.13 | 24,141,592.40 |
| Rental fees | 14,115,005.94 | 17,791,905.46 |
| Depreciation of use right assets | 2,970,607.66 | |
| Business entertainment expenses | 3,862,187.81 | 2,004,195.01 |
| Others | 7,720,414.48 | 9,273,023.12 |
| Total | 1,986,544,514.02 | 1,544,562,244.71 |
Other description: None
64. Administrative expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 139,371,643.54 | 123,787,011.29 |
| Equity incentive cost | 12,688,659.70 | 95,705,148.72 |
| Depreciation and amortization fees | 72,707,033.97 | 64,793,200.48 |
| Office allowance | 32,926,203.90 | 28,815,372.03 |
| Consulting service fees | 18,499,710.79 | 11,152,882.86 |
| Outsourcing warehouse management fees | 25,599,685.04 | 13,476,942.90 |
| Business entertainment expenses | 6,017,041.93 | 4,250,313.01 |
| Traveling expenses | 2,922,435.63 | 2,007,217.94 |
| Environmental protection fees | 3,080,326.43 | 2,920,486.57 |
| Rental fees | 4,916,595.12 | 4,972,311.62 |
| Depreciation of use right assets | 5,562,026.99 | |
| Others | 16,852,841.26 | 13,033,456.88 |
| Total | 341,144,204.30 | 364,914,344.30 |
Other description: None
65. R&D expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Employee remuneration | 38,282,563.30 | 35,421,883.98 |
| Direct investment | 141,887,483.28 | 123,888,034.21 |
| Depreciation and amortization fees | 26,981,304.24 | 26,261,981.44 |
| Others | 4,812,861.36 | 4,726,733.98 |
| Total | 211,964,212.18 | 190,298,633.61 |
Other description: None
66. Finance expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Interest fees | 1,872,913.37 | 2,903,635.12 |
| Less: Interest income | 10,512,490.53 | 8,202,097.37 |
| Exchange profit and loss | -3,248,733.35 | -18,603,312.21 |
| Transaction fee | 4,627,217.45 | 5,954,447.70 |
| Others | -81.13 | -54,219.48 |
| Total | -7,261,174.19 | -18,001,546.24 |
Other description: None
67. Other income
Unit: RMB
| Sources of other income | Incurred in the current period | Incurred in the prior period |
| Refund of individual income tax | 1,715,525.67 | 702,121.74 |
| Support funds for the transformation of Phase I project | 2,251,422.48 | 599,715.61 |
| Support funds for equipment of Phase II project | 1,955,301.73 | 1,971,248.16 |
| Subsidy funds for the smart factory project | 1,794,486.82 | 166,180.88 |
| Enterprise operation contribution award | 1,708,500.00 | |
| Support funds for the construction of Automated Storage & Retrieval System | 1,561,764.72 | 973,529.42 |
| Subsidies for Hubei C&S’s new factory infrastructure construction | 1,071,436.32 | 1,071,436.32 |
| Funds for reconstruction project of automatic production lines | 1,021,200.00 | 652,433.33 |
| Subsidies for R&D, famous-brand and high-quality products, and income/efficiency increase | 1,020,000.00 | |
| VAT exemption for employment of retired soldiers and poor population | 934,150.00 | 961,750.00 |
| Subsidies for internship, employment, job stabilization and training | 920,646.29 | 6,168,474.94 |
| Support funds for the technical transformation of equipment | 800,790.96 | 806,623.44 |
| Special funds for business development | 800,000.00 | |
| Support funds for enterprise technical upgrading | 792,374.28 | 660,311.90 |
| Subsidies for renovation | 700,000.00 | |
| Ex-post funds awarded to the first batch of the union enterprises for the technical transformation in 2017 | 634,586.64 | 634,586.64 |
| 2013-2017 financial support funds of the Management Committee of Pengzhou Industrial Development Zone, Sichuan Province | 625,447.80 | 625,447.80 |
| 25,000 tons capacity expansion project of Tangshan Subsidiary | 575,000.04 | 575,000.04 |
| Financial support for the sewage treatment station project of Tangshan Subsidiary | 477,272.76 | 477,272.76 |
| Support funds for the construction of environmental protection facilities | 319,047.60 | 319,047.60 |
| Subsidies for employees’ training while working | 297,000.00 | |
| Technical demonstration subsidies for water intake points | 280,000.00 | |
| Social security subsidies from the labor and employment administration | 234,000.00 | 53,532.00 |
| Special award funds for the restructuring of industrial enterprises | 210,900.00 | 410,000.00 |
| Subsidies for foreign trade stabilization | 200,000.00 | |
| Import interest discounts on imported equipment in 2014 | 193,875.00 | 193,875.00 |
| Special subsidy for the construction expansion of the 25,000-ton household paper project | 159,999.96 | 159,999.96 |
| Subsidies for construction of the water treatment project | 155,078.64 | 155,078.64 |
| Financial support for sewage centralized water treatment project | 121,500.00 | 121,500.00 |
| Provincial funds for traditional industry transformation projects | 107,142.84 | 89,285.70 |
| Tax contribution reward | 100,000.00 | |
| Subsidies for job creation for the poor | 97,995.00 | |
| Rewards for creation of odor-free enterprise | 62,752.29 | |
| Enterprise support funds | 50,000.00 | |
| Financial rewards for cleaner production transformation | 50,000.00 | |
| Subsidies for social insurance premiums | 31,604.66 |
| Government’s quality award 2020 | 30,000.00 | |
| Subsidies for encouraging scaled development of enterprises | 20,000.00 | |
| Rewards to “two outstanding and one advanced” recipients (outstanding party affair worker, outstanding party member, and advanced grass-root party organization) | 10,000.00 | |
| Subsidies for renovating old projects with new technologies and techniques | 3,000.00 | |
| Subsidies for supporting enterprises to expand import and export scale | 700.00 | 257,200.00 |
| Financial support funds allocated by the bureau of finance | 7,892,985.55 | |
| Support policy rewards of the bureau of economy, science and information technology | 1,310,000.00 | |
| Subsidies for production resumption under COVID-19 | 320,000.00 | |
| Award for breakthroughs with increases in businesses | 300,000.00 | |
| Subsidies for photovoltaic power rooftop | 224,640.00 | |
| Wage subsidiaries of Hong Kong | 126,835.56 | |
| Employment subsidies from the pandemic prevention and control fund | 73,156.71 | |
| Enterprise assistance funding plan of the ten billion anti-pandemic fund | 66,525.00 | |
| Support fund for advanced energy conservation and cleaner production in 2020 | 30,000.00 | |
| Subsidies for pandemic prevention and control | 24,750.00 | |
| Energy efficiency special fund 2019 | 20,000.00 | |
| Management system certification rewards 2018 | 10,000.00 | |
| Subsidies for pandemic prevention system building of enterprises by the bureau of economy, science, and information technology | 9,000.00 |
| One-off subsidy for delayed resumption of work | 7,440.00 | |
| Subsidies for industrial patents | 3,300.00 | |
| Total | 24,094,502.50 | 29,224,284.70 |
68. Return on investment
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Others | 365,973.72 | 3,868,134.28 |
| Total | 365,973.72 | 3,868,134.28 |
Other description:
"Others" refer to returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds of theCompany.
69. Profit of net exposure hedging: None
70. Income from changes in fair value: None
71. Credit impairment loss
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Bad debt loss from other receivables | -309,391.71 | -727,073.31 |
| Bad debt loss from accounts receivable | -9,051,093.81 | -5,735,079.40 |
| Total | -9,360,485.52 | -6,462,152.71 |
Other description: None
72. Asset impairment loss
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| II. Impairment Loss of Inventories and Contract Performance Cost | -3,442,595.01 | -1,623,983.68 |
| V. Impairment Loss of Fixed Assets | -24,348,744.97 | -14,239,740.49 |
| Total | -27,791,339.98 | -15,863,724.17 |
Other description: None
73. Return on disposal of assets
Unit: RMB
| Source | Incurred in the current period | Incurred in the prior period |
| Disposal of fixed assets | -462,228.42 | -1,630,681.60 |
| Total | -462,228.42 | -1,630,681.60 |
74. Non-operating income
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | Amount recognized as profit or loss of the current period |
| Profit from damage and retirement of non-current assets | 98,166.07 | 147,882.19 | 98,166.07 |
| Including: Fixed assets | 98,166.07 | 147,882.19 | 98,166.07 |
| Intangible assets | |||
| Government grants not related to the company’s daily activities | 270.00 | 11,000.00 | 270.00 |
| Income from fine and compensation | 1,954,623.83 | 3,993,312.79 | 1,954,623.83 |
| Amounts with no payments required | 614,936.63 | ||
| Others | 1,757,300.44 | 662,538.39 | 1,757,300.44 |
| Total | 3,810,360.34 | 5,429,670.00 | 3,810,360.34 |
Government grants recognized as profit and loss of the current period:
Unit: RMB
| Grants | Issuer | Reason | Nature and type | Whether the grant affected the profit and loss of the year | Whether a special grant | Amount incurred in the current period | Amount incurred in the last period | Related to asset/income |
| Wage survey subsidies of the Human Resources and Social Security Bureau of Zhongshan City | Human Resources and Social Security Bureau of Zhongshan City | Grant | Grants received for the performance of the State’s function of ensuring the supply or price control | No | No | 270.00 | Related to income |
| of a public utility or socially necessary product | ||||||||
| Party building funds for new economic organizations and new social organizations from the Mobile Party Member Management Service Center of Dongsheng Town, Zhongshan City | Mobile Party Member Management Service Center of Dongsheng Town, Zhongshan City | Grant | Grants received for the performance of the State’s function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 10,000.00 | Related to income | |
| Subsidies for west district from the Human Resources and Social Security Bureau of Zhongshan City | Human Resources and Social Security Bureau of Zhongshan City | Grant | Grants received for the performance of the State’s function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 1,000.00 | Related to income | |
| Total | 270.00 | 11,000.00 |
Other description: None
75. Non-operating expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | Amount recognized as profit or loss of the current period |
| External donations | 8,284,411.07 | 15,470,536.45 | 8,284,411.07 |
| Loss from damage and retirement of non-current assets | 1,690,488.06 | 1,497,805.16 | 1,690,488.06 |
| Including: Fixed assets | 1,690,488.06 | 1,497,805.16 | 1,690,488.06 |
| Intangible assets | |||
| Others | 2,084,181.36 | 3,944,517.51 | 2,084,181.36 |
| Total | 12,059,080.49 | 20,912,859.12 | 12,059,080.49 |
Other description: None
76. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Current income tax expense | 143,551,604.93 | 181,314,018.95 |
| Deferred income tax expense | -57,115,005.15 | 1,187,352.52 |
| Total | 86,436,599.78 | 182,501,371.47 |
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
| Item | Incurred in the current period |
| Total profit | 667,481,653.85 |
| Income tax expenses calculated at the statutory/applicable tax rate | 166,870,413.46 |
| Impacts of different tax rates applied to subsidiaries | -66,272,007.79 |
| Impacts of adjustments to income taxes during the prior period | -18,685,392.50 |
| Impacts of non-deductible costs, expenses and losses | 4,523,586.61 |
| Income tax expenses | 86,436,599.78 |
Other description: None
77. Other comprehensive income
Please refer to the notes for details.
78. Items of the cash flow statement
(1) Cash received related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Current accounts | 20,953,685.44 | 49,688,516.72 |
| Government grants | 10,830,599.76 | 60,126,856.61 |
| Interest income | 10,512,454.74 | 8,196,797.10 |
| Authorized collection of individual income tax under the equity incentive | 17,793,045.78 | 22,976,763.21 |
| Others | 10,242,024.23 | 11,716,603.06 |
| Total | 70,331,809.95 | 152,705,536.70 |
Explanation of cash received related to other operating activities: None
(2) Cash payments related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Expenses paid | 773,465,376.40 | 550,689,649.13 |
| Current accounts | 120,888,965.74 | 178,777,668.81 |
| Authorized payment of individual income tax under the equity incentive | 14,133,649.74 | 26,757,243.77 |
| Donation expenditure | 2,070,143.19 | 14,145,244.02 |
| Others | 9,929,582.35 | 4,113,886.93 |
| Total | 920,487,717.42 | 774,483,692.66 |
Explanation of cash paid related to other operating activities: None
(3) Cash received related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Principal repayment on maturity of wealth management products | 50,000,000.00 | 40,000,000.00 |
| Principal repayment on maturity of treasury bonds reverse repo | 87,105,000.00 | |
| Total | 50,000,000.00 | 127,105,000.00 |
Explanation of cash received related to other investment activities: None
(4) Cash payments related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Purchasing large-denomination Certificate of Deposit | 62,479,083.36 | |
| Purchasing wealth management products | 10,000,000.00 | 50,000,000.00 |
| Total | 72,479,083.36 | 50,000,000.00 |
Explanation of cash paid related to other investment activities: None
(5) Cash received related to other financing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
Explanation of cash received related to other financing activities: None
(6) Cash payments related to other financing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Share repurchase | 661,249,972.23 | 27,680,721.76 |
| Deposits of security deposits for bills, letters of guarantee and letters of credit | 2,127,733.68 | 47,412,150.07 |
| Repurchase and deregistration of equity incentives | 9,731,035.21 | 4,963,254.06 |
| Cash paid for lease liabilities | 9,320,775.83 | |
| Total | 682,429,516.95 | 80,056,125.89 |
Explanation of cash paid related to other financing activities: None
79. Supplementary information to cash flow statement
(1) Supplementary information to cash flow statement
Unit: RMB
| Supplementary information | Amount of the current period | Amount of last period |
| 1 Reconciliation of net profit to cash flows from operating activities: | -- | -- |
| Net Profit | 581,045,054.07 | 905,889,081.41 |
| Plus: Provisions for asset impairment | 37,151,825.50 | 22,325,876.88 |
| Depreciation of fixed assets, oil and gas assets and productive biological assets | 345,469,209.62 | 298,227,998.50 |
| Depreciation of use right assets | 8,828,248.39 | |
| Intangible asset amortization | 6,946,755.56 | 5,761,733.76 |
| Long-term unamortized expenses | 11,725,159.36 | 7,629,304.48 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets ("-" indicates income) | 462,228.42 | 1,630,681.60 |
| Losses from fixed assets write-off ("-" indicates income) | 1,592,321.99 | 1,349,922.97 |
| Losses from changes in fair value ("-" indicates income) | ||
| Finance expenses ("-" indicates income) | 7,347,594.03 | 6,083,169.25 |
| Investment losses ("-" indicates income) | -365,973.72 | -3,868,134.28 |
| Decrease in deferred income tax assets ("-" indicates increase) | -67,725,902.35 | -4,700,193.35 |
| Increase in deferred income tax liabilities ("-" indicates decrease) | 10,610,897.20 | 5,887,545.87 |
| Decrease in inventories ("-" indicates increase) | 197,085,573.38 | -673,208,087.17 |
| Decrease in operating receivables ("-" indicates increase) | -143,214,872.03 | -283,241,489.30 |
| Increase in operating payables ("-" indicates decrease) | 309,932,827.71 | 442,728,302.91 |
| Others | 12,688,659.70 | 95,705,148.72 |
| Net cash flow from operating activities | 1,319,579,606.83 | 828,200,862.25 |
| 2 Significant investment and financing activities not involving cash: | -- | -- |
| Conversion of debt to capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets acquired under finance lease | ||
| 3 Net changes in cash and cash equivalents: | -- | -- |
| Balance of cash at the end of the period | 797,797,675.70 | 1,050,034,135.72 |
| Less: Balance of cash at the beginning of the period | 1,050,034,135.72 | 675,996,852.97 |
| Plus: Balance of cash equivalents at the end of the period | ||
| Less: Balance of cash equivalents at the beginning of the period | ||
| Net increase in cash and cash equivalents | -252,236,460.02 | 374,037,282.75 |
(2) Net cash paid to acquire subsidiaries during the period: None
(3) Net cash received from the disposal of subsidiaries during the period
(4) Constitution of cash and cash equivalents
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| I. Cash | 797,797,675.70 | 1,050,034,135.72 |
| Including: Cash on hand | 46,249.83 | 36,349.55 |
| Bank deposits always available for payment | 795,982,835.01 | 1,047,785,634.71 |
| Other monetary funds always available for payment | 1,768,590.86 | 2,212,151.46 |
| III. Balance of Cash and Cash Equivalents at the End of the Period | 797,797,675.70 | 1,050,034,135.72 |
Other description: None
80. Notes to items in the statement of changes in owner’s equity
Description on the name and amount of items under "Others" whose closing balance in last year was adjusted and other relevantissues: None
81. Assets with restricted right to use or ownership
Unit: RMB
| Item | Book value at the end of the period | Reason for restriction |
| Other monetary funds | 77,254,817.42 | Security deposits for issuing letter of credit and notes |
| Total | 77,254,817.42 | -- |
Other description: None
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Balance of foreign currency at the end of the period | Conversion rate | Balance of converted RMB at the end of the period |
| Monetary funds | -- | -- | 306,306,577.75 |
| Including: USD | 46,310,258.59 | 6.3738 | 295,172,326.20 |
| EUR | |||
| HKD | 13,621,545.82 | 0.8174 | 11,134,251.55 |
| Accounts receivable | -- | -- | 33,078,108.23 |
| Including: USD | 573,418.81 | 6.3738 | 3,654,856.81 |
| EUR | |||
| HKD | 35,996,148.05 | 0.8174 | 29,423,251.42 |
| Long-term borrowings | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | 157,176.13 | ||
| Including: HKD | 192,287.90 | 0.8174 | 157,176.13 |
| Accounts payable | 251,681,464.58 | ||
| Including: USD | 39,038,873.95 | 6.3738 | 248,825,974.78 |
| EUR | 22,000.00 | 7.2409 | 159,299.80 |
| JPY | 48,580,000.00 | 0.0555 | 2,696,190.00 |
| Other payables | 2,302,742.08 | ||
| Including: HKD | 2,813,788.08 | 0.8174 | 2,299,990.38 |
| USD | 431.72 | 6.3738 | 2,751.70 |
Other description: None
(2) For overseas business entities, especially important ones, disclose their main overseas business address,the standard currency for accounting and selection basis. If there are changes in the standard currency foraccounting, reasons shall be also provided.
√ Applicable □ Not applicable
| Overseas business entity | Business address | Standard currency for accounting |
| Zhong Shun International Co., Ltd. | Hong Kong | RMB |
C&S Hong Kong Co., Ltd.
| C&S Hong Kong Co., Ltd. | Hong Kong | RMB |
| C&S (Macao) Co., Ltd. | Macao | RMB |
83. Hedges
Disclosure of hedged items and related hedging instruments and qualitative and quantitative information about hedged risksaccording to the type of hedging: None
84. Government grants
(1) Basic information on government grants
Unit: RMB
| Category | Amount | Reporting items | Amount recognized as profit or loss for the current period |
| Related to asset | 4,000,000.00 | Deferred income, other income | 872,441.50 |
| Related to income | 7,761,248.24 | Other income | 7,761,248.24 |
| Related to income | 270.00 | Non-operating income | 270.00 |
| Total | 11,761,518.24 | 8,633,959.74 |
(2) Return of government grants
□ Applicable √ Not applicable
Other description:
Please refer to Note VII (51), (67) and (74) for details.
85. Others: None
VIII. Changes in the Consolidated Scope
1. Business combinations of enterprises not under common control
(1) Business combinations of enterprises not under common control in the reporting period: None
(2) Combination costs and goodwill: None
(3) Acquiree’s identifiable assets and liabilities on the acquisition date: None
(4) Profit or loss arising from the recalculation based on fair value of equities held before the acquisitiondateWhether there are transactions through which business combination is achieved in stages while control is obtained within thereporting period
□ Yes √ No
(5) Descriptions of being unable to determine the consideration or the fair value of acquiree’s identifiableassets and liabilities on the acquisition date or at the end of the current period of combination: None
(6) Other description: None
2. Business combinations of enterprises under common control
(1) Business combinations of enterprises under common control in the current period: None
(2) Combination costs: None
(3) Book value of assets and liabilities of the combined party on the date of combination: None
3. Reverse purchase: None
4. Disposal of subsidiaries
Whether there is situation that one disposal of investment in a subsidiary results in a loss of control
□ Yes √ No
Whether there is situation that the disposal of investment in a subsidiary is achieved in stages through multiple transactions while thecontrol is lost in the reporting period
□ Yes √ No
5. Changes in the scope of consolidation due to other reasons
Description of changes in the scope of combination due to other reasons (establishment or liquidation of subsidiaries, etc.) and
related situations:
The Company invested and founded C&S (Jiangsu) Paper Co., Ltd. on February 25, 2021, with a registeredcapital of RMB200 million. C&S Paper holds 100% of its stakes. C&S (Jiangsu) Paper Co., Ltd. was incorporatedinto the scope of consolidated statements from February 2021. Currently, C&S (Jiangsu) Paper has startedoperating activities.On May 19, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and YunnanJiaqu Trading Co., Ltd. jointly invested and established Yunnan Dolemi Trading Co., Ltd., with a registeredcapital of RMB4 million. Dolemi Sanitary Products holds 60% of the shares while Yunnan Jiaqu holds 40% of theshares. The Company has incorporated Yunnan Dolemi Trading Co., Ltd. into the scope of its consolidatedstatements since May 2021. Yunnan Dolemi Trading Co., Ltd. was dissolved and canceled on October 19, 2021,and the Company no longer incorporated it into the scope of consolidated statements from the date of cancellation.On May 20, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and LuzhouLongmatan District Jisheng Trading Co., Ltd. jointly invested and established Luzhou Dolemi Sanitary ProductsCo., Ltd., with a registered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares whileJisheng Trading holds 40% of the shares. The Company has incorporated Luzhou Dolemi Sanitary Products Co.,Ltd. into the scope of its consolidated statements since May 2021. Currently, Luzhou Dolemi has started operatingactivities.On June 08, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and SichuanZhong’en Liancheng Technology Co., Ltd. jointly invested and established Mianyang Dolemi Sanitary ProductsCo., Ltd., with a registered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares whileZhong’en Liancheng holds 40% of the shares. The Company has incorporated Mianyang Dolemi SanitaryProducts Co., Ltd. into the scope of its consolidated statements since June 2021. Currently, Mianyang Dolemi hasstarted operating activities.On July 12, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and HenanDuoxian Trading Co., Ltd. jointly invested and established Zhengzhou Dolemi Sanitary Products Co., Ltd., witha registered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares while Duoxian Tradingholds 40% of the shares. The Company has incorporated Zhengzhou Dolemi Sanitary Products Co., Ltd. into thescope of its consolidated statements since July 2021. Currently, Zhengzhou Dolemi has not started operatingactivities.On July 14, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and DazhouJiatai Trading Co., Ltd. jointly invested and established Dazhou Dolemi Sanitary Products Co., Ltd., with aregistered capital of RMB1.5 million. Dolemi Sanitary Products holds 60% of the shares while Jiatai Tradingholds 40% of the shares. The Company has incorporated Dazhou Dolemi Sanitary Products Co., Ltd. into thescope of its consolidated statements since July 2021. Currently, Dazhou Dolemi has started operating activities.On August 6, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, and GuizhouFangsheng Trading Co., Ltd. jointly invested and established Guiyang Dolemi Sanitary Products Co., Ltd., witha registered capital of RMB2 million. Dolemi Sanitary Products holds 60% of the shares while GuizhouFangsheng Trading holds 40% of the shares. The Company has incorporated Guiyang Dolemi Sanitary ProductsCo., Ltd. into the scope of its consolidated statements since August 2021. Currently, Guiyang Dolemi has startedoperating activities.On August 18, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, andZhanjiang Wei’s Trading Co., Ltd. jointly invested and established Zhanjiang Dolemi Sanitary Products Co.,Ltd., with a registered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares whileZhanjiang Wei’s Trading holds 40% of the shares. The Company has incorporated Zhanjiang Dolemi Sanitary
Products Co., Ltd. into the scope of its consolidated statements since August 2021. Currently, Zhanjiang Dolemihas not started operating activities.On September 01, 2021, the Company and Bloomage Biotechnology Corporation Limited jointly invested andestablished Beijing Bloomage Jierou Biotechnology Co., Ltd., with a registered capital of RMB10 million. TheCompany holds 51% of the shares while Bloomage Biotechnology holds 49% of the shares. The Company hasincorporated Beijing Bloomage Jierou Biotechnology Co., Ltd. into the scope of its consolidated statements sinceSeptember 2021. Currently, Bloomage Jierou has started operating activities.On September 02, 2021, Dolemi Sanitary Products Co., Ltd., a wholly owned subsidiary of the Company, andXi’an Boyu Hengchang Trading Co., Ltd. jointly invested and established Xi’an Dolemi Sanitary Products Co.,Ltd., with a registered capital of RMB1 million. Dolemi Sanitary Products holds 60% of the shares while BoyuHengchang Trading holds 40% of the shares. The Company has incorporated Xi’an Dolemi Sanitary Products Co.,Ltd. into the scope of its consolidated statements since September 2021. Currently, Xi’an Dolemi has not startedoperating activities.
6. Others: None
IX. Equities in Other Entities
1. Equities in subsidiaries
(1) Composition of the enterprise group
| Name of subsidiary | Main business address | Registered address | Principal businesses | Shareholding percentage | Obtaining method | |
| Direct | Indirect | |||||
| Jiangmen Zhongshun Paper Co., Ltd. | Jiangmen, Guangdong | Jiangmen, Guangdong | R&D, production, and sales (including online sales): household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; sales (including online sales) of Class I and II medical devices. (The above items do not involve special management measures for the foreign access). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 88.25% | 11.75% | Capital contribution for establishment |
| Zhejiang Zhongshun Paper Co., Ltd. | Jiaxing, Zhejiang | Jiaxing, Zhejiang | General items: manufacture of paper products; sales of paper products; sales of paper pulp; sales of personal hygiene products; sales of hygiene products and disposable medical products; sales of disinfectants (excluding hazardous chemicals); sales of Class I medical devices; retail of Class I medical devices; sales | 75.00% | 25.00% | Capital contribution for establishment |
| of Class II medical devices; retail of class II medical devices; wholesale of medical face masks; retail of medical face masks; sales of general merchandise; retail of daily necessities; sales of maternal and infant products; wholesale of kitchenware, sanitary ware and daily sundries; wholesale of cosmetics; retail of cosmetics; wholesale of needle textiles and raw materials; sales of needle textiles; sales of chemical industry products (excluding chemical products that need to be licensed); Internet sales (excluding the sales of commodities requiring a permit) (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||
| C&S Hong Kong Co., Ltd. | Hong Kong | Hong Kong | Purchase of pulp | 100.00% | Capital contribution for establishment | |
| C&S (Yunfu) Paper Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, wholesale, retail and online sales: household paper, sanitary products, maternal and infant products, daily necessities, cosmetics, medical devices, sanitary materials, non-woven fabrics and products, polymer materials and products, daily sundries, and disinfectant products (excluding hazardous chemicals); wholesale, retail and online sales: food; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval); warehousing services (limited to warehouses qualified in fire protection without hazardous chemicals). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Capital contribution for establishment | |
| Yunfu Hengtai Trading Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | Wholesale, retain and online sales: paper, wood pulp, sanitary products, maternal and infant products, cosmetics, daily necessities, medical equipment, daily sundries, disinfection supplies (excluding dangerous chemicals); import and export of goods or technologies (excluding the import and export of goods and | 100.00% | Capital contribution for establishment |
| technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||
| C&S (Macao) Co., Ltd. | Macao | Macao | Wholesale, trade | 100.00% | Capital contribution for establishment | |
| Zhongshan Zhongshun Trading Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdong | Wholesale, retail and online sales (sales only on third-party platforms) of paper supplies, paper products (excluding printing products), wood pulp, general merchandise, hygiene products, cosmetics, nonwoven products, chemical products for daily use, Class I medical devices and food; warehousing (excluding hazardous chemicals and precursor chemicals); import and export of goods and technologies; operations of Class II and Class III medical devices. (The above business scope involves food operations, import and export of goods, and import and export of technologies.) (Exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| Xiaogan C&S Trading Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Import, export and sales of paper products, general merchandise and pulp boards; sales of cosmetics, shower gel and sanitary pads; sales of baby products (excluding food). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| Beijing C&S Paper Co., Ltd. | Beijing | Beijing | Sales of paper products, daily necessities, paper pulp, and pulp boards; import and export of goods. (The company may independently select business items and carry out business activities in accordance with the law; for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments based on | 100.00% | Business combinations involving enterprises under common |
| contents of the approval; it is prohibited to engage in business activities of items prohibited and restricted by the city’s industrial policies.) | control | |||||
| Chengdu Zhongshun Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | Sales of household paper, cleaning products, general merchandise, hygiene products, baby products, cosmetics, nonwoven products, feminine hygiene products, chemical products for daily use, daily necessities, medical devices, medical supplies and disinfectant products (excluding hazardous chemicals); e-commerce [For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.] | 100.00% | Business combinations involving enterprises under common control | |
| Hangzhou Jie Rou Trading Co., Ltd. | Hangzhou, Zhejiang | Hangzhou, Zhejiang | Wholesale, retail: paper products, paper pulp, general merchandise; import and export of goods and technologies (exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained); other legitimate items that do not need approval according to the law) (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments) | 100.00% | Business combinations involving enterprises under common control | |
| Shanghai Huicong Paper Co., Ltd. | Shanghai | Shanghai | Household paper, paper pulp, pulp boards, import and export of goods and technologies. (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Hubei) Paper Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Licensed items: production of sanitary products and disposable medical supplies; production of cosmetics (for items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to the approval document or the permit issued by competent department). General items: sales of sanitary products and disposable medical supplies; retail of cosmetics; wholesale of cosmetics; manufacture of paper; sales of personal hygiene products; sales of knitwear; manufacture of maternal | 93.375% | 6.625% | Business combinations involving enterprises under common control |
| and infant products; sales of maternal and infant products; sales of paper products; manufacture of paper products; sales of daily necessities; sales of daily chemical products; sales of disinfectants (excluding hazardous chemicals); Internet sales (excluding the sales of commodities requiring a permit); sales of Class I medical devices; sales of Class II medical devices; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||
| Zhong Shun International Co., Ltd. | Hong Kong, China | Hong Kong, China | Sales of paper products | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Sichuan) Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | Licensed items: production of sanitary products and disposable medical supplies; import and export of goods (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments, and the specific business items are subject to the approval document or the permit issued by relevant department). General items: sales of sanitary products and disposable medical supplies; sales of personal hygiene products; sales of daily necessities; manufacture of paper products; sales of paper products; manufacture of paper; manufacture of daily chemical products; sales of daily chemical products; sales of Class II medical devices; sales of Class I medical devices; manufacture of industrial textile products; sales of industrial textile products; manufacture of maternal and infant products; sales of maternal and infant products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) | 100.00% | Business combinations involving enterprises under common control |
| C&S (Zhongshan) Paper Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdong | Production, processing and sales: high-class household paper products (excluding printing process); import and export of pulp boards (exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Dazhou) Paper Co., Ltd. | Dazhou, Sichuan | Dazhou, Sichuan | R&D, production, processing, and sales (including online sales): household paper, tissue boxes, hygiene products, cosmetics, non-woven products, plastic products, metalware, rubber products, ceramics, baby products, feminine hygiene products and daily necessities; bamboo and forest trees planting; acquisition of raw materials of bamboo and wood for paper making; R&D, production and sales of bamboo pulp, wood pulp, bamboo chips and wood chips; combined heat and power and sales; warehouse leasing; processing and sales of lime and limestone; processing of industrial wastewater and gray water reuse; general import and export business; sales of construction materials, hardware and electrical products, and chemical products (excluding hazardous products). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Capital contribution for establishment | |
| Sun Daily Necessities Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, processing, and online sales: paper products, hygiene products, cosmetics, nonwoven products, plastic products for daily use, chemical products for daily use, metalware for daily use, rubber products for daily use, and ceramics for daily use; import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 50.00% | 50.00% | Capital contribution for establishment |
| Dolemi Sanitary Products Co., | Zhongshan, Guangdong | Zhongshan, Guangdon | General items: manufacture of paper products; Internet sales (sales only on third-party platforms) (excluding the sales of commodities requiring a permit); sales of | 60.00% | 40.00% | Capital contribution for |
| Ltd. | g | personal hygiene products; sales of household products, sales of hygiene products and disposable medical products; retail of cosmetics; sales of general merchandise; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | establishment | |||
| C&S (Jiangsu) Paper Co., Ltd. | Suqian, Jiangsu | Suqian, Jiangsu | Licensed items: manufacture of Class II medical devices; import and export of goods; import and export of technologies; manufacture of Class III medical devices; operation of Class III medical devices (for items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to approval result). General items: manufacture of paper products; sales of plastic products; sales of paper products; Internet sales (excluding the sales of commodities requiring a permit); sales of daily necessities; sales of personal hygiene products; sales of household products; sales of sanitary products and disposable medical products; retail of cosmetics; wholesale of cosmetics; sales of knitwear; wholesale of kitchen utensils and daily groceries; sales of metal products; sales of rubber products; manufacture of daily-sue ceramic products; R&D of kitchen utensils and daily groceries; retail of kitchen utensils and daily groceries; sewage treatment and recycling; manufacture of Class I medical devices; sales of Class I medical devices; sales of Class II medical devices; sales of disinfectants (excluding hazardous chemicals). (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) | 100.00% | Capital contribution for establishment | |
| Beijing Bloomage Jierou Biotechnology | Beijing | Beijing | Technology development, technology consultation, technology transfer, technology promotion, and technical services; sales of paper products, daily necessities, hygiene products, cosmetics, chemical products (excluding hazardous chemicals), Class I | 51.00% | Capital contribution for establishme |
| Co., Ltd. | medical devices, Class II medical devices, disinfection products and non-medical masks. (The market entity may independently select business items and carry out business activities in accordance with the law; for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments based on contents of the approval; it is prohibited to engage in business activities of items prohibited and restricted by national and municipal industrial policies.) | nt | ||||
| Luzhou Dolemi Sanitary Products Co., Ltd. | Luzhou, Sichuan | Luzhou, Sichuan | General items: sales of personal hygiene products; sales of paper products; Internet sales (excluding the sales of commodities requiring a permit); sales of household products; sales of sanitary products and disposable medical products; sales of daily necessities; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products (the company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) | 60.00% | Capital contribution for establishment | |
| Mianyang Dolemi Sanitary Products Co., Ltd. | Mianyang, Sichuan | Mianyang, Sichuan | General items: wholesale of cosmetics; sales of personal hygiene products; manufacture of paper products; Internet sales (excluding the sales of commodities requiring a permit); sales of household products; sales of sanitary products and disposable medical products; retail of cosmetics; sales of daily necessities; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products (the company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law). | 60.00% | Capital contribution for establishment | |
| Zhengzhou Dolemi Sanitary Products Co., Ltd. | Zhengzhou, Henan | Zhengzhou, Henan | General items: sales of personal hygiene products; sales of household products; sales of sanitary products and disposable medical products; retail of cosmetics; sales of daily necessities; sales of plastic products; sales of paper products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products (the company may carry out business operations | 60.00% | Capital contribution for establishment |
| independently according to the law based on the business license, except for items that must be licensed according to the law). | ||||||
| Dazhou Dolemi Sanitary Products Co., Ltd. | Dazhou, Sichuan | Dazhou, Sichuan | General items: sales of personal hygiene products; sales of sanitary products and disposable medical products; sales of paper products; Internet sales (excluding the sales of commodities requiring a permit); sales of household products; retail of cosmetics; sales of daily necessities; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products; convention and exhibition services (the company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) | 60.00% | Capital contribution for establishment | |
| Guiyang Dolemi Sanitary Products Co., Ltd. | Guiyang, Guizhou | Guiyang, Guizhou | Items prohibited by laws, regulations and decisions of the State Council cannot be engaged; items whose operation requires permission (approval) as stipulated by laws, regulations and decisions of the State Council can be engaged after obtaining the permit (approval) document; for items requiring no permission (approval) under laws, regulations and decisions of the State Council, market entity may choose whether to engage independently. Other unspecified retail trade; sales of paper products; sales of daily necessities; retail of cosmetics; sales of sundries; sales of household products; retail of arts and crafts and collectibles (except ivory and its products); brand management; convention and exhibition services (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments) | 60.00% | Capital contribution for establishment | |
| Zhanjiang Dolemi Sanitary Products Co., Ltd. | Zhanjiang, Guangdong | Zhanjiang, Guangdong | General items: sales of hygiene products and disposable medical products; sales of personal hygiene products; retail of cosmetics; sales of daily necessities; sales of sundries; sales of rubber products; sales of plastic products; sales of metal products; sales of paper products; convention and exhibition services. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) | 60.00% | Capital contribution for establishment | |
| Xi’an Dolemi | Xi’an, | Xi’an, | General items: sales of daily necessities; retail of | 60.00% | Capital |
| Sanitary Products Co., Ltd. | Shaanxi | Shaanxi | cosmetics; sales of household goods; sales of office supplies; sales of arts and crafts and etiquette products (except ivory and its products); sales of building decoration materials; sales of knitwear; sales of machinery and equipment; sales of instruments and meters; retail of clothes and apparels; retail of shoes and hats; sales of foods (only pre-packaged foods); sales of sundries; sales of electronic products; landscaping engineering construction; advertising design and agency; network technology services; marketing planning; convention and exhibition services; etiquette services. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law) | contribution for establishment |
Description of the difference between the percentage of shares held in a subsidiary and the percentage of voting rights: NoneBasis for holding 50% or less than of the voting rights but controlling the investee, or holding 50% or more of the voting rights butnot controlling the investee: NoneBasis for controlling the important consolidated structured entities: NoneBasis for determining whether the Company is an agent or a principal: NoneOther descriptions: All shares held indirectly belong to the shares held by wholly-owned subsidiaries of the Company
(2) Important non-wholly-owned subsidiaries: None
Other description:
The Company does not have important non-wholly-owned subsidiaries..
(3) Main financial information of important non-wholly-owned subsidiaries: None
(4) Significant restrictions on the use of the assets and the repayment of the debts of the enterprise group:
None
(5) Financial or other support provided to consolidated structured entities: NoneOther description:
Note: C&S (Yunfu) Co., Ltd. was changed to Yunfu Hengtai Trading Co., Ltd. in March 2021.
2. Transactions in which the share of owner’s equity in a subsidiary changes while control of the subsidiaryis still retained
(1) Description of changes in the share of owner’s equity in the subsidiary: None
(2) Impact of the transaction on the equity of minority shareholders and the equity attributable to ownersof the Parent Company: NoneOther descriptionThere are no transactions of the Company in which the share of owner’s equity in a subsidiary changes andcontrol of the subsidiary is retained.
3. Interests in joint arrangements or associates
(1) Important joint ventures or associates: None
(2) Main financial information of important joint ventures: None
(3) Main financial information of important associates: None
(4) Summary financial information of unimportant joint ventures and associates: None
(5) Description of significant restrictions on the ability of joint ventures or associates to transfer funds tothe Company: None
(6) Excess losses incurred by joint ventures or associates: None
(7) Unconfirmed commitments related to the investment in joint ventures: None
(8) Contingent liabilities related to the investment in joint ventures or associates: None
4. Important joint operation: None
Other descriptionThe Company does not have important joint operations..
5. Interests in unconsolidated structured entities
Description of unconsolidated structured entities:
The Company does not have interests in unconsolidated structured entities.
6. Others: None
X. Risks Associated with Financial Instruments
The main financial instruments of the Company include monetary funds, notes receivable, accounts receivable,notes payable, accounts payable, other payables, loans, etc. Please refer to relevant items of "Note VII" fordetailed information of all financial instruments. The risks associated with these financial instruments and the riskmanagement policies adopted by the Company to reduce these risks are as follows. The management of theCompany manages and monitors these risk exposures to ensure that the above risks are kept within control.The Company adopts the sensitivity analysis method to analyze the possible impact of reasonable and possiblechanges in risk variables on the profit and loss or shareholder equities in the current period. Since any riskvariable rarely changes in isolation and the correlation between the variables will have a significant effect on theultimate financial impact of changes in a certain risk variable, the following contents are under the consumptionthat changes of a variable are independent.The goal of the Company’s risk management is to strike a proper balance between risks and gains and to minimizethe negative impact of risks on the business performance of the Company while maximizing the interests ofshareholders and other equity investors. Based on this risk management goal, the basic strategy of the Company’srisk management is to determine and analyze all kinds of risks faced by the Company, clarify the minimum of riskacceptance and conduct risk management, and monitor risks of all kinds in a timely and reliable manner to controlrisks within the limits.
1. Credit risk
Credit risk refers to the risk of financial losses of one party caused by the failure of the other party to perform itsobligations. As of December 31, 2021, the largest credit exposure that may cause financial losses to the Companymainly comes from the losses of the Company’s financial assets due to failure of the other contractual party toperform its obligations.In order to reduce credit risk, the Company only conducts transactions with recognized customers with goodcredit status, and continuously monitors the accounts receivable through credit monitoring of existing customersand aging analysis to ensure that the Company does not face the risk of bad debts and keep the overall credit riskwithin control.Liquid funds of the Company are deposited in banks with high credit ratings, so the credit risk of liquid funds islow.
2. Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flow of financial instruments dueto changes in market interest rates. The interest rate risk faced by the Company mainly comes from bankborrowings. By developing a good relationship with banks and carrying out proper design of credit lines, types ofcredits, and credit terms, the Company ensures sufficient bank credit lines to meet its various financing needs. Therisk of interest rate fluctuation can be reasonably reduced by shortening the term of a single loan and speciallystipulating early prepayment terms.
3. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations in the fair value or future cash flow of financial instrumentsdue to changes in foreign exchange rates. The Company tries its best to match foreign currency income withforeign currency expenditure to reduce foreign exchange risks.Foreign exchange risks borne by the Company are mainly related to USD and HKD. Except for purchasing andselling in USD and HKD by its overseas subsidiaries, other major business activities of the Company are priced
and settled in RMB. See "Note VII (82)" for the conversion of foreign currency financial assets and liabilities intoRMB as of December 31, 2021. During the reporting period, the Company generated exchange profit and loss of-RMB3,248,733.35.Sensitivity analysis of foreign exchange risk:
Analysis assumption: On the basis that all other variables remain constant on the balance sheet date, the possible,reasonable changes of foreign exchange rate will have the following pre-tax effects on the Company’s profit andloss and shareholders’ equity in the current period:
| Item | End of year | |
| Impact on profit | Impact on shareholders’ equity | |
| Appreciation of RMB against foreign currency by 1.00% | -855,576.55 | -855,576.55 |
| Depreciation of RMB against foreign currency by 1.00% | 855,576.55 | 855,576.55 |
4. Liquidity risk
Liquidity risk refers to the risk of capital shortage when an enterprise fulfills its obligation to settle accounts bydelivering cash or other financial assets. The Company’s policy is to ensure that it has sufficient cash to repaymature debts. Liquidity risk is centrally controlled by the financial departments of the Company. The financialdepartments monitor cash balances, negotiable securities that can be cashed in at any time, and carry out rollingforecasts on cash flows in the next six months to ensure that the Company has sufficient funds to repay debtsunder all reasonable forecasts.Financial liabilities held by the Company as of December 31, 2021 analyzed based on the maturity period ofundiscounted remaining contractual obligations are as follows:
| Item | Within 1 year | Over 1 year | Total |
| Notes payable | 334,969,632.58 | 334,969,632.58 | |
| Accounts payable | 825,831,744.94 | 3,282,035.37 | 829,113,780.31 |
Other payables
| Other payables | 845,094,973.44 | 9,777,205.34 | 854,872,178.78 |
| Non-current liabilities due within one year | 8,616,487.38 | 8,616,487.38 | |
| Lease liabilities | 5,565,928.14 | 5,565,928.14 |
Total
| Total | 2,005,896,350.96 | 13,059,240.71 | 2,018,955,591.67 |
XI. Disclosure of Fair Value
1. Fair value of assets and liabilities measured at fair value at the end of the reporting period: None
2. Basis for determining the market price of recurring and non-recurring fair value measurement items inLevel 1: None
3. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurement items in Level 2: None
4. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurement items in Level 3: None
5. Adjustment information and sensitivity analysis of unobservable parameters between the opening andclosing book values of recurring fair value measurement items of Level 3: None
6. For recurring fair value measurement items with transfer between different levels, reasons for suchtransfer and policies for determining the time of conversion: None
7. Changes in valuation techniques within the reporting period and reasons for such changes: None
8. Fair value of financial assets and financial liabilities not measured at fair value: None
9. Others: None
XII. Related Parties and Related Party Transactions
1. Information on the Parent Company of the Company
| Name of Parent Company | Registered address | Principal businesses | Registered capital | Shareholding percentage of the Parent Company to the Company | Percentage of voting right of the Parent Company to the Company |
| Guangdong Zhongshun Paper Group Co., Ltd. | Zhongshan, Guangdong | External investment; consulting of information on commodities circulation (exclusive of real estate, labor services, financial futures, and studying abroad) | RMB30 million | 28.62% | 28.62% |
Information on the Company’s Parent Company
The ultimate controller of the Company is Mr. Deng Yingzhong, the father, and Mr. Deng Guanbiao and Mr. Deng Guanjie, whosetwo sons.Other description: None
2. Information on subsidiaries of the Company
See Note IX Equities in Other Entities for detailed information on the subsidiaries of the Company.
3. Information on the joint ventures and associates of the Company
For important joint ventures or associates, please refer to the notes for details.Other descriptionThe Company does not have interests in joint venture arrangements or associates.
4. Information on other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| Chung Shun Co. | A company controlled by the Company’s actual controller/other shareholder holding 5% or more of shares |
| Guangzhou Zhongshun Trade Co., Ltd. | A company controlled by the nephew and the husband of the niece of Mr. Deng Yingzhong, director of the Company |
| Bama Zhongshun Health Products Co., Ltd. | A company in which the Company’s actual controller Mr. Deng Yingzhong serves as a director |
| Yantai Zhongshun Network Technology Co., Ltd. | The partially-owned subsidiary of Bama Zhongshun Health Products Co., Ltd. controlled by the Company’s controlling shareholders |
| Shenzhen Zhongshun Caizhi Investment Co., Ltd. | A company jointly controlled by the Company’s actual controllers Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie |
| Pengzhou Enjoying Life Trading Co., Ltd. | A company in which the son of the Company’s Vice President Yue Yong holds 50% equity and serves as a supervisor |
| Sichuan West Enjoying Life Trading Co., Ltd. | A company where the son of the Company’s Vice President Yue Yong holds 50% equity and serves as a supervisor |
| Chongqing Qinyue Trading Co., Ltd. (Former: Chongqing Fuling District Qinyue Household Necessities Co., Ltd.) | A company in which the spouse of the brother of the Company’s Vice President Yue Yong holds 99% equity |
| Shenzhen Jinju Investment Co., Ltd. | A company in which the Company’s actual controller Mr. Deng Guanbiao serves as a director and Mr. Deng Guanjie serves as a supervisor |
| Zhongshan Zhongshun Caizhi Trading Co., Ltd. | A company in which the Company’s actual controller Mr. Deng Guanjie serves as the manager and executive director and Mr. Deng Guanbiao serves as a supervisor. |
| Zhongshan Qianlai Network Technology Co., Ltd. | A company controlled by the Company’s independent director Mr. Liu Die |
| Foshan Yingfang Jiayu Consulting Services Co., Ltd. | A company controlled by the Company’s supervisor Liang Yongliang |
| Meizhou Xinhong Electronics Co., Ltd. | A company in which the mother-in-law of the Company’s actual controller Mr. Deng Guanbiao holds 100% of the shares and serves as the General Manager and executive director |
| Guangzhou Xinghui Paper Co., Ltd. | A company in which the sibling-in-laws of the Company’s supervisor Zhang Gao hold 88% of the shares and act as the legal representative |
| Guangzhou Jiahui Enterprise Management Co., Ltd. | A company in which the sibling-in-laws of the Company’s supervisor Zhang Gao hold 99% of the shares and act as the legal representative while Mr. Zhang’s spouse holds 1% of the shares and serve as the executive director |
| China Paper Investment Co., Ltd. | A company in which the sibling-in-laws of the Company’s supervisor Zhang Gao serve as directors |
| Zhejiang FTZ Xinjiachang Trading Co., Ltd. | A company in which the sibling-in-laws of the Company’s supervisor Zhang Gao hold 100% of the shares and act as directors |
| Zhuhai High-tech Zone Shengda Engineering Consulting Service Center | A company in which the son of the Company’s CFO Dong Ye serves as the legal representative |
| Zhongshan Jufengbao Trading Co., Ltd. | A company in which the Company’s Board Secretary and Vice President hold 90% of the shares and serve as the executive director and legal representative |
| Foshan Shunde Taogang Trading Co., Ltd. | A company in which the brother of the Company’s director and actual controller Mr. Deng Yingzhong holds 50% of the shares and serves as the legal representative |
Other description
Note: The Company’s directors, supervisors, senior managers and their close family members are related partiesof the Company.
5. Information on related party transactions
(1) Related party transactions for purchase and sale of goods, and provision and acceptance of laborservicesPurchase of goods/acceptance of labor services
Unit: RMB
| Related party | Content of related party transaction | Incurred in the current period | Approved transaction limit | Whether to outstrip the transaction limit | Incurred in the prior period |
| Sichuan West Enjoying Life Trading Co., Ltd. | Promotion fee | 255,495.97 | 500,000.00 | No |
Table of sale of goods/provision of labor services
Unit: RMB
| Related party | Content of related party transaction | Incurred in the current period | Incurred in the prior period |
| Pengzhou Enjoying Life Trading Co., Ltd. | Sale of goods | 2,372,236.58 | 1,378,011.50 |
| Sichuan West Enjoying Life Trading Co., Ltd. | Sale of goods | 309,795.62 | 641,228.34 |
| Chongqing Qinyue Trading Co., Ltd. | Sale of goods | 330,512.87 | |
| Guangdong Zhongshun Paper Group Co., Ltd. | Sale of goods | 56,637.17 |
Explanation of the related party transactions for purchase and sale of goods, and provision and acceptance of labor servicesIt is expected that the amount of related party transactions between the Company and Sichuan West Enjoying Life Trading Co., Ltd.Was RMB500,000 in 2021, including the related party’s provision of services to the Company and the Company’s sales of goods tothe related party.
(2) Related entrusted management/contracting and entrusting management/contracting out: None
(3) Related lease
The Company as the lessee: NoneThe Company as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Lease fee confirmed in the current period | Lease fee confirmed in the last period |
| Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie | Housing lease | 2,919,181.44 | 3,004,787.91 |
Explanation of related lease: None
(4) Related guarantee: None
(5) Interbank borrowing between related parties: None
(6) Asset transfer and debt reorganization between related parties: None
(7) Remuneration for key managers
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Remuneration for key managers | 36,922,924.97 | 34,173,895.09 |
(8) Other related party transactions
6. Receivables from and payables to related parties
(1) Receivables
Unit: RMB
| Project | Related party | Balance at the end of the period | Balance at the beginning of the period | ||
| Book balance | Impairment provision | Book balance | Impairment provision | ||
| Accounts receivable | Chongqing Qinyue Trading Co., Ltd. | 60,876.03 | 3,043.80 | ||
| Other receivables | Chongqing Qinyue Trading Co., Ltd. | 44.63 | 2.23 | ||
(2) Payables
Unit: RMB
| Project | Related party | Book balance at the end of the period | Book balance at the beginning of the period |
| Other payables | Sichuan West Enjoying Life Trading Co., Ltd. | 282,242.81 | |
| Contract liabilities | Sichuan West Enjoying Life Trading Co., Ltd. | 126.90 | 195.90 |
| Contract liabilities | Pengzhou Enjoying Life Trading Co., Ltd. | 9,374.37 | 1.67 |
7. Commitments of related parties: None
8. Others: None
XIII. Share-based Payment
1. Overall information on share-based payment
√ Applicable □ Not applicable
Unit: RMB
| The Company’s total amount of all equity instruments granted in the current period | 0.00 |
| The Company’s total amount of all equity instruments exercised in the current period | 8,655,088.00 |
| The Company’s total amount of all equity instruments expired in the current period | 3,560,349.00 |
| Scope of exercise prices and remaining contractual term of the Company’ stock options issued as at the end of the reporting period | The grant price for restricted stock options awarded by the Company in the first grant period as at the end of reporting period is RMB8.572/share, and that for reserved stock options is RMB13.865/share; the validity period is from the grant date of the stock options to the date when all stock options are exercised or canceled, with a maximum period of 60 months. |
Other description: None
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
| Method of determining the fair value of equity instruments at the grant date | Restricted shares: the stock closing prices at the grant date Stock options: Black-Scholes model for option pricing |
| Basis for determining the number of vested equity instruments | Upon approval of the general meeting of shareholders |
| Reasons for significant differences between current estimates and previous estimates | None |
| Cumulative amount of equity-settled share-based payments recognized as capital surplus | 115,633,467.53 |
| Total fees confirmed by the equity-settled share-based payment in the current period | 12,688,659.70 |
Other description
3. Cash-settled share-based payment
□ Applicable √ Not applicable
4. Revision and termination of share-based payment
There was no revision and termination of share-based payment of the Company during the reporting period.
5. Others
None
XIV. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet dateAs at December 31, 2021, the Company had no significant commitments that should have been disclosed but arenot disclosed.
2. Contingencies
(1) Significant contingent matters on the balance sheet date
As at December 31, 2021, the Company had no significant contingent matters that should have been disclosed butare not disclosed.
(2) Explanations are also necessary if the Company has no significant contingent matters to be disclosedThere are no significant contingent matters to be disclosed in the Company.
3. Others
NoneXV. Events after Balance Sheet Date
1. Significant non-adjusting events: None
2. Profit distribution:
Pursuant to resolutions made on the 13th meeting of the fifth session of the Board of Directors on April 26, 2022,the profit distribution proposal in 2021 is as follows: Based on the number of shares of the Company’s total sharecapital minus the number of repurchased shares as at the equity registration date of the implementation of thisprofit distribution plan, distribute a cash dividend of RMB1.00 (tax included) for every 10 shares to allshareholders; no bonus shares will be issued and no capital reserve will be converted into share capital. TheCompany’s total share capital may change as of the equity registration date for the implementation of this profitdistribution plan in the future due to the repurchase and deregistration of restricted shares, exercise of stockoptions, etc. The Company will maintain the profit distribution amount for every 10 shares and change the totalamount of profit distribution accordingly. The proposal can be implemented only after submitting to and beingapproved by the general meeting of shareholders.
3. Sales return: None
4. Explanation on other events after the balance sheet date: None
XVI. Other Significant Matters
1. Corrections to previous accounting errors
(1) Retroactive restatement approach: None
(2) Prospective approach: None
2. Debt restructuring: None
3. Assets replacing
(1) Exchange of non-monetary assets: None
(2) Other asset replacing: None
4. Annuities plan: None
5. Operation discontinuation: None
6. Segment information
(1) Determination basis and accounting policies of reporting segments
The Company does not have operating segments with different economic features and hence has not identifiedoperating segments according to internal organization structure, management requirements and internal reportingpolicies. Therefore, there was no information on reporting segments based on operating segments to be disclosed.
(2) Financial information on reporting segments: None
(3) Explanation on reasons if the Company has no reporting segments or is unable to disclose the totalassets and liabilities of the reporting segments: None
(4) Other description: None
7. Other important transactions and matters that may affect the decisions of investors: None
8. Others
External guarantees of the CompanyIn 2021, the Company signed the XIAOYIDA Business Cooperation Agreement with Bank of China LimitedZhongshan Branch and Shanghai Junmeng E-commerce Co., Ltd. (No. 2021-XYDXY-33725001), under whichthe bank offers a credit line of XIAOYIDA service up to RMB200 million to Shanghai Junmeng and the Companyprovides a joint and several liability guarantee. The line of credit is valid until June 22, 2022. As of December 31,2021, Shanghai Junmeng had no financing balance left of the XIAOYIDA service.In 2021, Zhongshan Zhongshun Trading Co., Ltd., a subsidiary of the Company, signed the XIAOYIDA BusinessCooperation Agreement with Bank of China Limited Zhongshan Branch and Wuhan Jie Rou E-commerce Co.,Ltd. (No. 2021-XYDXY-33725002), under which the bank offers a credit line of XIAOYIDA service up toRMB145 million to Wuhan Jie Rou and the Company provides a joint and several liability guarantee. The line ofcredit is valid until August 5, 2022. As of December 31 2021, Wuhan Jie Rou had no financing balance left of theXIAOYIDA service.XVII. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Category | Balance at the end of the period | Balance at the beginning of the period | ||||||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Including: | ||||||||||
| Accounts receivable for which bad debt reserve is set aside in portfolios | 173,226,692.33 | 100.00% | 2,171,652.96 | 1.25% | 171,055,039.37 | 94,047,365.99 | 100.00% | 1,399,993.66 | 1.49% | 92,647,372.33 |
| Including: | ||||||||||
| Portfolio based on aging | 82,828,535.15 | 47.82% | 2,171,652.96 | 2.62% | 80,656,882.19 | 56,099,681.03 | 59.65% | 1,399,993.66 | 2.50% | 54,699,687.37 |
| Portfolio based on related parties | 90,398,157.18 | 52.18% | 90,398,157.18 | 37,947,684.96 | 40.35% | 37,947,684.96 | ||||
| Total | 173,226,692.33 | 100.00% | 2,171,652.96 | 1.25% | 171,055,039.37 | 94,047,365.99 | 100.00% | 1,399,993.66 | 1.49% | 92,647,372.33 |
Bad debt reserve set aside individually: NoneBad debt reserve set aside in portfolios: 2,171,652.96
Unit: RMB
| Name | Balance at the end of the period | ||
| Book balance | Impairment provision | Ratio of provision | |
| Within the credit period | 67,870,642.71 | 1,357,412.86 | 2.00% |
| Credit period - 1 year | 14,632,826.05 | 731,641.30 | 5.00% |
| 1 to 2 years | 207,443.99 | 31,116.60 | 15.00% |
| 2 to 3 years | 36,645.00 | 10,993.50 | 30.00% |
| 3 to 5 years | 80,977.40 | 40,488.70 | 50.00% |
| Over 5 years | 100.00% | ||
| Total | 82,828,535.15 | 2,171,652.96 | -- |
Description of reason for the portfolio:
Accounts receivable with the same aging have similar credit risk characteristics.Description of reason for the portfolio:
If the bad debt reserve of accounts receivable is set aside according to general model of expected credit loss, please refer to thedisclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 172,901,625.94 |
| 1 to 2 years | 207,443.99 |
| 2 to 3 years | 36,645.00 |
| Over 3 years | 80,977.40 |
| 3 to 4 years | 80,977.40 |
| Total | 173,226,692.33 |
(2) Bad debt reserve that is set aside, recovered or transferred back in the reporting period
Provision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable | 1,399,993.66 | 771,659.30 | 2,171,652.96 | |||
| Total | 1,399,993.66 | 771,659.30 | 2,171,652.96 | |||
Wherein, the amount of recovered or transferred back bad debt reserve in the reporting period is important: None
(3) Accounts receivable actually written off in the reporting period
Description on the write-offs of accounts receivables:
The Company did not have written-off accounts receivable in the reporting period.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the period | Percentage in total balance of accounts receivable at the end of the period | Balance for bad debt reserve at the end of the period |
| 1st | 90,398,157.18 | 52.18% | |
| 2nd | 19,483,670.07 | 11.25% | 389,673.40 |
| 3rd | 15,222,369.16 | 8.79% | 350,923.36 |
| 4th | 7,925,671.37 | 4.58% | 313,013.17 |
| 5th | 5,731,213.33 | 3.31% | 198,384.52 |
| Total | 138,761,081.11 | 80.11% | -- |
(5) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of accountsreceivableThe Company has no accounts receivable derecognized due to the transfer of financial assets as at the end of thereporting period.
(6) Accounts receivable derecognized due to transfer of financial assets: None
2. Other receivables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Other receivables | 128,580,102.05 | 136,987,584.64 |
| Total | 128,580,102.05 | 136,987,584.64 |
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Significant dividends receivable exceeding one year: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
Other description: None
(3) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature | Book balance at the end of the period | Book balance at the beginning of the period |
| Current accounts | 125,981,678.74 | 131,125,900.41 |
| Reserve | 724,829.00 | 639,681.19 |
| Margins and deposits | 253,137.00 | 113,606.00 |
| Others | 1,844,844.60 | 5,494,420.94 |
| Total | 128,804,489.34 | 137,373,608.54 |
2) Provision of bad debt reserve
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without | Expected credit losses in the whole duration (with |
| credit impairment) | credit impairment) | |||
| Balance as at January 1, 2021 | 386,023.90 | 386,023.90 | ||
| Balance as at January 1, 2021 in the reporting period | —— | —— | —— | —— |
| Transferred-back in the reporting period | 143,185.66 | 143,185.66 | ||
| Write-off in the reporting period | 18,450.95 | 18,450.95 | ||
| Balance as at December 31, 2021 | 224,387.29 | 224,387.29 |
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 128,751,535.29 |
| 1 to 2 years | 44,600.00 |
| Over 3 years | 8,354.05 |
| Over 5 years | 8,354.05 |
| Total | 128,804,489.34 |
3) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other receivables | 386,023.90 | 143,185.66 | 18,450.95 | 224,387.29 | ||
| Total | 386,023.90 | 143,185.66 | 18,450.95 | 224,387.29 | ||
The amount of other accounts receivable written-off by the Company in the year was RMB18,450.95.Where the amount of recovered or reversed bad debt reserve in the reporting period is important: None
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
| Other receivables actually written off | 18,450.95 |
Description of write-offs of important other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of the amount | Balance at the end of the period | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt reserve at the end of the period |
| 1st | Current accounts | 98,082,768.08 | Within 1 year | 76.15% | |
| 2nd | Current accounts | 26,398,361.92 | Within 1 year | 20.49% | |
| 3rd | Current accounts | 1,817,447.37 | Within 1 year | 1.41% | 90,872.37 |
| 4th | Others | 138,124.39 | Within 1 year, 4-5 years | 0.11% | 10,665.54 |
| 5th | Others | 97,880.60 | Within 1 year | 0.08% | 4,894.03 |
| Total | -- | 126,534,582.36 | -- | 98.24% | 106,431.94 |
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of otherreceivables: None
3. Long-term equity investments
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 1,945,421,378.56 | 1,945,421,378.56 | 1,928,113,219.50 | 1,928,113,219.50 | ||
| Total | 1,945,421,378.56 | 1,945,421,378.56 | 1,928,113,219.50 | 1,928,113,219.50 | ||
(1) Investment in subsidiaries
Unit: RMB
| Investee | Balance at the | Increase/decrease in the period | Closing balance | Closing |
| beginning of the period (Book value) | Increase in investment | Decrease in investment | Impairment Provision | Others | (book value) | balance of impairment provision | |
| Jiangmen Zhongshun Paper Co., Ltd. | 698,614,821.47 | 559,563.62 | 699,174,385.09 | ||||
| Zhongshan Zhongshun Trading Co., Ltd. | 94,817,296.68 | 1,889,769.88 | 96,707,066.56 | ||||
| Yunfu Hengtai Trading Co., Ltd. | 30,200,274.51 | 869.50 | 30,201,144.01 | ||||
| C&S (Yunfu) Paper Co., Ltd. | 657,837,465.42 | 759,016.40 | 658,596,481.82 | ||||
| C&S (Zhongshan) Paper Co., Ltd. | 12,683,100.00 | 12,683,100.00 | |||||
| Sun Daily Necessities Co., Ltd. | 200,000.00 | 200,000.00 | |||||
| C&S (Sichuan) Paper Co., Ltd. | 173,385,439.98 | 3,087,887.32 | 176,473,327.30 | ||||
| C&S (Dazhou) Paper Co., Ltd. | 6,000,000.00 | 6,000,000.00 | |||||
| C&S (Hubei) Paper Co., Ltd. | 196,016,245.13 | 1,460,392.03 | 197,476,637.16 | ||||
| Zhejiang Zhongshun Paper Co., Ltd. | 56,524,520.15 | 1,540,752.38 | 58,065,272.53 | ||||
| C&S (Jiangsu) Paper Co., Ltd. | 5,700,000.00 | 96,828.33 | 5,796,828.33 | ||||
| Zhong Shun International Co., Ltd. | 785,042.74 | 96,220.83 | 881,263.57 | ||||
| Dolemi Sanitary Products Co., Ltd. | 869.50 | 869.50 | |||||
| Chengdu Zhongshun | 627,524.58 | 42,532.45 | 670,057.03 |
| Paper Co., Ltd. | |||||||
| Xiaogan C&S Trading Co., Ltd. | 311,467.66 | 8,938.00 | 320,405.66 | ||||
| Hangzhou Jie Rou Trading Co., Ltd. | 104,095.00 | 22,345.02 | 126,440.02 | ||||
| Shanghai Huicong Paper Co., Ltd. | 5,926.18 | 2,173.80 | 8,099.98 | ||||
| Beijing Bloomage Jierou Biotechnology Co., Ltd. | 2,040,000.00 | 2,040,000.00 | |||||
| Total | 1,928,113,219.50 | 7,740,000.00 | 9,568,159.06 | 1,945,421,378.56 |
(2) Investment in associates and joint ventures: None
(3) Other description: None
4. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | ||
| Income | Cost | Income | Cost | |
| Principal business | 1,054,822,665.07 | 875,587,399.73 | 1,034,162,235.27 | 822,204,492.12 |
| Other businesses | 1,328,294,351.23 | 1,240,959,177.22 | 598,353,119.61 | 555,594,473.69 |
| Total | 2,383,117,016.30 | 2,116,546,576.95 | 1,632,515,354.88 | 1,377,798,965.81 |
Information related to income:
Unit: RMB
| Contract classification | Branch 1 | Branch 2 | Total | |
| By product type | 2,383,117,016.30 | 2,383,117,016.30 | ||
| Including: | ||||
| Household paper | 1,047,145,308.26 | 1,047,145,308.26 | ||
| Personal care | 7,677,356.81 | 7,677,356.81 | ||
| Others | 1,328,294,351.23 | 1,328,294,351.23 | ||
| By operating region | 2,383,117,016.30 | 2,383,117,016.30 |
| Including: | ||||
| Domestic | 2,383,117,016.30 | 2,383,117,016.30 | ||
| Abroad | 0.00 | 0.00 | ||
| By market or customer type | ||||
| Including: | ||||
| Contract type | ||||
| Including: | ||||
| By the time of goods transfer | ||||
| Including: | ||||
| By contract term | ||||
| Including: | ||||
| By sales channel | 2,383,117,016.30 | 2,383,117,016.30 | ||
| Including: | ||||
| Traditional | 757,760,827.46 | 757,760,827.46 | ||
| Non-traditional | 297,061,837.61 | 297,061,837.61 | ||
| Others | 1,328,294,351.23 | 1,328,294,351.23 | ||
| Total | 2,383,117,016.30 | 2,383,117,016.30 |
Information related to performance obligation: NoneInformation related to the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed contract that is not performed orfully performed at the end of the reporting period is RMB5,083,475.44, of which the income of RMB5,083,475.44 is expected to beconfirmed as income in the year of 2022.Other description: None
5. Return on investment
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Income from long-term equity-based investment accounted for using the cost method | 482,375,000.00 | 140,000,000.00 |
| Others | 329,072.79 | 3,256,231.99 |
| Total | 482,704,072.79 | 143,256,231.99 |
6. Others: None
XVIII. Supplementary Information
1.List of non-recurring profits and losses of the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Description |
| Profits/losses from the disposal of non-current asset | -2,054,550.41 |
Governmental grants reckoned into currentprofits/losses (not including grants enjoyedin quota or ration according to nationalstandards, which are closely relevant to thecompany’s normal business)
| 22,379,246.83 | ||
| Profits/losses from assets entrusted to others for investment or management | 365,973.72 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds |
| Other non-operating income and expenses except for the aforementioned items | -4,941,142.49 | |
| Less: Influence of income tax | 2,564,492.76 | |
| Total | 13,185,034.89 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss:
□ Applicable √ Not applicable
The Company has no other profit and loss items that meet the definition of non-recurring profit and loss.Descriptions where the Company defines any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement onInformation Disclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and lossitems during the reporting period
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Profit in the reporting period | Weighted average return on net assets | Earnings per share | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to the | 11.82% | 0.45 | 0.44 |
| ordinary shareholders of the Company | |||
| Net profit attributable to the ordinary shareholders of the Company after excluding non-recurring profit and loss | 11.55% | 0.44 | 0.43 |
3. Difference in accounting data under domestic and international accounting standards
(1) Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable √ Not applicable
(2) Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable √ Not applicable
(3) Explanation of reasons for the differences between accounting data disclosed under domestic andoverseas accounting standards. If differences are adjusted based on data audited by overseas auditinstitutions, the name of the institution should be noted.
4. Others
If there are any ambiguities, the Chinese version shall prevail.